The central bank now tightens noose around loose-run lending operations by non-banking financial institutions (NBFIs) limiting their loan or lease rescheduling to only thrice.
Officials of the Bangladesh Bank say the brake is being pressed to ensure "credit discipline" in the sector -- where a slew of fiascos are being complained in some cases.
The NBFIs have been instructed to make decisions on the rescheduling of loans or leases within one month after receiving requisite down payments, according to a notification issued Tuesday by the BB.
Application for first-time rescheduling will be taken into consideration upon receiving cash payments of at least 15 per cent of the overdue installments or 10 per cent of the total outstanding amount of a loan or lease, whichever is less.
Rescheduling application for a second time will be considered upon receiving cash payments of minimum 30 per cent of the overdue installments or 20 per cent of the total outstanding amount of a loan or lease, whichever is less.
For third time, application for rescheduling will be considered upon receiving cash payments of minimum 50 per cent of the overdue installments or 30 per cent of the total outstanding amount of a loan or lease, whichever is less.
"We've issued the notification to protect the depositors' interests through ensuring credit discipline in the sector," a BB senior official told the FE Wednesday while explaining virtues of the instructions.
Quoting the notification, the central banker said a borrower would be treated as willful defaulter if he/she failed to repay their loans or leases after enjoying three rescheduling facilities.
The borrowers will get maximum nine years for clearing their term loans or leases through enjoying the rescheduling facilities, he explained.
In case of short-term loans or leases, the borrowers will be eligible for maximum two years for making their payments through availing such rescheduling facility, according to the notification.
It also says the accumulated amount of interest on rescheduled loans or leases will be put into interest-suspended account not being taken into income account, unless actually realized.
The regulator's latest move came against the backdrop of the re-fixing of the timeframe and amount of installment of loans and leases using different ways by some NBFIs.
Real picture of loan recovery in the NBFIs sector is not reflected because of the re-fixation of payments scheduled besides not following rescheduling policy properly, according to the notification.
Md Nurul Amin, chairman of FAS Finance and Investment Limited, welcomed the latest BB moves, saying that it will help ensure good governance in the NBFIs sector.
Mr Amin, also former chairman of the Association of Bankers, Bangladesh (ABB), said borrowers would be alert about getting into the trap of being dubbed 'willful defaulter' for noncompliance with rules and regulations in the rescheduling policy.
"It'll help ensure credit discipline in the NBFIs," Golam Sarwar Bhuiyan, vice chairman of Bangladesh Leasing and Finance Companies Association (BLFCA), told the FE in his initial reaction.
Mr Bhuiyan, also managing director of Industrial and Infrastructure Development Finance Company (IIDFC) Limited, said the policy for rescheduling loans or lease for the NBFIs is almost similar to that for the banks.