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In Bangladesh, the primary reason behind excessive bad loans is a general lack of governance and, in particular, the inability to enforce banking regulations, which breeds corruption and moral hazard.
Instead of superficially looking at the numbers and making excuses, the Bangladesh Bank should have observed the trend and character of surging risky loans in the country.
The central bank yesterday relaxed the rules on credit rescheduling and restructuring for the borrowers who have defaulted on the repayments of loans with non-bank financial institutions (NBFIs).
The loan rescheduling policy recently announced by the Bangladesh Bank has evoked a mixed reaction from industry leaders and economists.
The Bangladesh Bank today relaxed the policy for loan rescheduling of defaulted loans grossly, as the defaulters will now get a maximum of eight years to repay term loans instead of the previous two years.