Loans, leases and investments extended by non-bank financial institutions (NBFIs) to ship manufacturers could be rescheduled for up to 10 years as the central bank took the initiative to help beleaguered borrowers resume making installments.

Revenue flows to ship-builders, catering to both local and international markets, have been affected for various reasons that are not within their control. As a result, they are failing to pay installments regularly, the central bank said in a notice yesterday. 

Under the circumstances, simplifying the repayment process for the affected borrowers is required in a bid to recover long-pending unrepaid loans and reduce the level of classified loans.   

NBFIs have been asked to create two separate accounts --- one for outstanding principal amount and the other for outstanding interest amount – on the basis of the dues payable as of June 30 this year.

Interest rate-related outstanding has to be transferred to an interest-free block account while non-banks can impose interest on the outstanding principal amount as per conventional rules. 

As of 2022, ship-builders owed Tk 513 crore to the NBFI sector, which accounted for 1.62 percent of the industry's total loans disbursed, according to the Bangladesh Bank Stability Report 2022.

Loans can be rescheduled for 10 years, including a two-year grace period, said the circular. 

The principal amount has to be realised after the expiration of the grace period. Then lenders would be able to recoup the interest amount transferred to the block account.

However, borrowers can repay both unpaid principal and interest amounts during the grace period as well. 

Clients would have to make at least a 2.5 percent down payment to access the rescheduling facility, said the notice. Loans created owing to irregularities will not qualify for the facility. 

If lenders can't realise the unpaid principal amount and the accrued interest, they would be able to take legal actions to recoup the funds.

Clients have until 90 days to deposit the down payment and apply for the rescheduling facility from the date of the notification of the circular.

The boards of NBFIs will get 60 days to decide whether they would approve the applications or not.  

In June, the BB asked banks to offer the same facility to the shipbuilding industry.

At the end of 2022, the banking sector's NPL stood at Tk 120,649 crore. The ship-building and shipbreaking industry accounted for 22.43 percent of the total, the highest among all sectors, BB data showed.

In March, NPLs stood at Tk 17,855 crore in the NBFI sector, up more than 25 percent from Tk 14,232 crore a year ago.

There are more than 200 ship-builders in Bangladesh.