A directive issued by the Bangladesh Bank (BB) to incentivise good borrowers with a 10 per cent rebate on the interest charged against their loan account has reportedly come as a surprise to many banks. Bankers do, of course, have reasons to view the matter from their own perspectives as money lenders. However, the BB's purpose in issuing this instruction, as it appears to be, is purported to recognising the uprightness of those borrowers who go by their terms of lending. This is more so in a situation where loan scams and default loans do still continue to be the worrying aspects of the country's lending culture. Under such circumstances, the banks are finding it difficult to force the defaulters repay the staggering amounts they have apparently gobbled up.
Clients who have fulfilled the loan conditions and whose loan accounts have remained unclassified for three consecutive years, were termed good borrowers by the central bank in its directive. A number of banks, as a recent report in one of the contemporaries indicated, have reacted rather sharply to the BB's directive. That is understandable; they consider it the duty of the lenders to repay the loans on time and that this consequently earns them the automatic reward of getting further loans along with other facilities. Besides, as some senior bankers have been reported to have said, good borrowers are already getting low lending rates amid growing competition among the banks. High-quality customers also enjoy privileges while paying commission on letters of credit, charges against foreign currency purchases and other fees.
The directive of the central bank to offer the reward to good borrowers has come in the wake of the controversy that the country's financial governance is prone to showing some kind of leniency or bias towards 'influential' big-loan defaulters. The central bank, rightly or wrongly, has faced some criticism after it had allowed some such large 'influential' borrowers, who had Tk 5.0 billion or above in loans, a special rescheduling (or to be precise, restructuring) facility. The move was intended to, what its defenders stated, rescue the big borrowers from impending cash crunch, caused by 'external and domestic factors beyond their control'.
Viewed in right perspective, the announcement of the rebate for law-abiding borrowers cannot be considered any kind of defence for laxity in financial governance. This laxity in an uninterrupted sequence since long has helped a section of people to swindle billions from a number of banks. This has also caused default loans to prevail as a sickening feature of the country's banking system. Again, the issue of rebate or reward remains unclear as it is still not known whether house building, small and medium enterprise (SME) etc., loans will also come under the purview. This tends to indicate that the move is not all that innocuous, as it was claimed to be.
In a recent development, nine conglomerate defaulters have applied to the BB for long-term 'rescheduling' of Tk 137.85 billion under the central bank's loan restructuring policy. This has reportedly been due to difficulties in implementing the earlier BB rescheduling decision, arising out of the various lending terms of the banks. Now, as rescheduling itself has become a problem for the banks to implement, it remains to be seen how the central bank plans to go about realising the huge default loans for reasons of extension of help to large borrowers in 'distress'. A mechanism will hopefully be found sooner or later but this should not become a pattern to lure future loan-seekers into the 'merriment' of non-repayment.
