In compliance with IMF conditions tied to a $4.7 billion loan, Bangladesh Bank has proposed a reduction in the overdue time for term loans. The move aims to align with international practices, cutting the overdue time from 180 days to 90 days, potentially raising non-performing loans (NPLs) by Tk80,000 crore.
Analysts suggest that while the policy shift reflects true financial health and aids loan recovery, it may challenge banks initially, impacting profitability. Bangladesh Bank also plans to reduce the write-off period from three to two years. Experts anticipate increased demands for loan rescheduling and acknowledge the impact on net profits due to heightened provisioning requirements. The central bank seeks to establish a privately led Asset Management Company (AMC) to expedite defaulted loan recovery, aligning with IMF demands.
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