Bangladesh Further Extends Ban on Downgrading Borrowers

Bangladesh Bank has instructed banks not to change their classifications of loans for another three months for borrowers that fail to make repayments.

The central bank first amended its loan classification rules in response to Covid-19 in March, asking banks not to classify overdue loans as doubtful and bad until after 30 June. In June, Bangladesh Bank extended the policy's end date until September 30.

The policy has now been further extended until 31 December, as businesses continue to struggle amid the Covid-19 pandemic. However, banks are asked to upgrade the classification of loans where borrowers are able to make regular repayments.

In addition, bnks are not allowed to impose penalties or additional interest for non-payment of loans during the January to December 2020 period, though they can offer rebates as incentives to encourage earlier repayment.