Janata struggling with restructured large loans

State-owned Janata Bank is struggling to recover the large loans it restructured under a Bangladesh Bank special policy last year.

Under the policy, Janata has rescheduled Tk 5,270 crore in loans. Some of the clients' repayments matured in June this year but not all of them were able to pay the due instalments.

The bank retrieved Tk 326 crore out of Tk 441 crore due from the restructured loans in June, said Managing Director Abdus Salam.

Clients who have failed to pay their instalments in June have until September to do so, after which they will once again become defaulters, he said.

Of the Janata's restructured loans, the highest amount has been of Beximco Group's, of Tk 1,958 crore.

But the group's repayment will mature in September and if Beximco fails to pay the bank by December, the loans will slip into bad debts again.

In a major move last year, the BB allowed defaulters of large loans -- Tk 500 crore and above -- to reschedule their debts on the ground that they were affected by 'various external and domestic factors beyond their control'.

The move came after Beximco Group had applied to the BB to rescue it from a cash crunch.

The BB took applications of the defaulters through their respective banks and examined the proposals before approval in July last year.

Under the policy, Janata rescheduled loans worth Tk 665.78 crore for Tharmex Group, Tk 642.65 crore for Jamuna Group, Tk 1,125.55 crore for Annotex Group, Tk 427.26 crore for Ratanpur Group, Tk 113.62 crore for SA Group and Tk 337 crore for BR Spinning Mills.

To take the restructuring facility, a borrower had to pay minimum 1 percent of the loan as down-payment if the loan figure exceeded Tk 1,000 crore.  The down-payment was 2 percent for borrowers of Tk 500 crore and Tk 1,000 crore.

After getting the restructuring facility, large borrowers were allowed to enjoy 50 percent term loans against their last credit limit from their respective banks and 60 percent for their working capital. The restructured loans will have a maximum tenure of 12 years for term loans and six years for demand and/or continuous loans.

The interest rate against the outstanding balance of the restructured loans may be at a discount from the prevailing declared rate of the bank. However, it may not be less than the cost of fund plus 1 percent.

The banks will have to keep the restructured loans under 'special mention' accounts and they must keep 2 percent provision against such type of loans, according to the central bank.