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BB issues stricter guidelines for identifying willful defaulters

Published : Thursday, 4 April, 2024 at 12:00 AM  Count : 462
Business Correspondent
In a move to strengthen financial discipline, the Bangladesh Bank (BB) on Wednesday issued a new circular that outlined stricter guidelines for identifying and dealing with willful defaulters.

The circular, issued by the Department of Financial Institutions and Markets (DFIM), provides a clearer definition of willful defaulters and lays out specific measures to be taken against them. These measures may include classifying them as bad borrowers, restricting access to credit facilities, and initiating legal proceedings.

"This new circular aims to create a more robust and transparent system for dealing with willful defaulters," said a spokesperson for the Bangladesh Bank. "By taking a stricter approach, we hope to deter loan defaults and promote a healthier financial environment."

The circular outlines several factors that will be considered when identifying a willful defaulter, including: diverting funds away from loan repayment, concealing assets or income and failing to cooperate with restructuring efforts.

The BB expects this new regulation to improve loan recovery rates and encourage responsible borrowing practices.

Business leaders have expressed mixed reactions to the new circular. Some have lauded it as a necessary step to address the issue of non-performing loans, while others have raised concerns about the potential impact on legitimate businesses facing temporary financial difficulties.

A BB official said stakeholders should be assured that the new measures will be implemented with due diligence and that there will be mechanisms in place to address genuine hardship cases.

The BB aims to create a more robust system for dealing with willful defaulters and promote a healthier financial environment, he said.

The circular elaborated about credit facility restrictions and legal proceedings against the willful; defaulters.

Factors considered when identifying willful defaulters include diverting funds, concealing assets/income, and failing to cooperate with restructuring efforts.



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