Little impact on loan rescheduling

NATIONAL ELECTION

Bankers' hopes of making substantial loan recovery in the lead up to the polls did not come about as many sharp-witted election candidates rescheduled their loans earlier in the year to keep their nomination unproblematic.

No loan defaulter is allowed to contest in the national election as per the Representation of the People Order (RPO). As a result, there is a flurry of loan rescheduling in the run up to the submission of nomination papers. To reschedule loans, a down payment of 10 to 30 percent is needed, and banks were hoping a similar pattern would ensue this year too.

But, there was no such rush.

State-owned Sonali, Bangladesh's largest bank, rescheduled loans of 10 defaulters against which it recovered Tk 17 crore. Its fellow state banks Agrani and Rupali rescheduled loans of three and seven defaulters respectively, against which they recovered about Tk 2 crore and Tk 5 crore.

Private banks Prime, Pubali and Dhaka rescheduled loans of about 12 defaulters and recovered Tk 10 crore altogether.

In what was a new headache for banks, many election candidates got stay orders from court instead of seeking rescheduling: their loans were already rescheduled thrice, the maximum allowed by Bangladesh Bank rules.

Between November 8 and November 27, a total of 202 applications were made for loan rescheduling, according to a high official of the Bangladesh Bank.

The central bank also formed a separate team and directed it to give permission for rescheduling if there were no major violations in the applications. Some 42 applications were turned down as they applied too close to the deadline for submission of nomination papers of November 28, leaving the central bank with no time to study their papers.

The RPO this time though allowed candidates to get their loans rescheduled until a day before the submission of nomination papers. The previous cut-off was one week. A total of 3,056 nomination papers were submitted this time, and the scrutiny of the nomination papers was held yesterday.

Most of the candidates were rejected on grounds of default loans.

Agrani, Janata, Rupali and BASIC Banks reported 40 persons to the returning officers as defaulters.

“We made an effort for loan recovery eyeing the election,” said Zaid Bakht, chairman of Agrani Bank. Agrani Bank rescheduled the loans of defaulters who applied following the rules and those who did not fall under the rules were referred to the BB.

But the number of loan defaulters with the bank who sought nomination was small, so its recovery amount was also small, according to Bakht.

Some heavyweight candidates got their loans rescheduled earlier in the year to keep their candidacies unproblematic. For instance, Salman F Rahman, who got a nomination ticket from Awami League, is the vice-chairman of Beximco Group.

Beximco Group is the parent company of Beximco Limited and the majority shareholder of GMG Airlines, and both the companies got their loans with Sonali Bank rescheduled earlier this year.

• Courtesy: The Daily Star /Business/ Dec 03, 2018