Loan rescheduling and impact on Banking Essay
THE central bank extended a set of new facilities to loan defaulters to give them a fresh lifeline, stoking fears of further deterioration in the banking sector’s financial health. As per the new policy, #the defaulters will be allowed to reschedule their classified loans by making a down payment of only 2 percent instead of the existing 10-50 percent. #A maximum 9 percent interest will be charged on the rescheduled loans while the existing interest rate is 12-16 percent. #Besides, the tenure for repayment is 10 years with a grace period of one year. #Based on the bank’s relationship with the client, the accrued interest on the defaulted loan can be waived, leaving the defaulter to pay only the principal amount with the new interest rate of 9 percent. #Businesspeople from wheat, food stuff and edible oil manufacturing sectors, and shipbuilding, ship-breaking, steel and aluminium industries will get the facilities straightaway. Defaulters from the other sectors wi...