Bangladesh Bank (BB) has issued revised guidelines for rescheduling housing loans, relaxing earlier time-bound restrictions to better support borrowers and align repayments with their financial capacity.
According to a central bank circular, the move is aimed at facilitating regular installment payments by introducing more flexible repayment structures. Previously, housing loans of up to Tk100 crore were subject to a maximum rescheduling period of six years. This rigid limit often resulted in rescheduled tenures being shorter than the borrower’s original remaining loan term, sharply increasing monthly installments.
Under the new guidelines, BB has removed the fixed six-year cap and linked repayment extensions to the loan’s remaining tenure. This change is expected to reduce equated monthly installments (EMIs) and lower the risk of default by keeping payments within borrowers’ actual cash-flow capacity.
Banks are now authorised to calculate the maximum repayment period based on the rescheduling sequence. A grace period of up to six months may also be allowed, subject to the borrower’s projected cash flow.
For a first rescheduling, the maximum repayment period will be the existing remaining tenure plus an additional 30 percent of that term. In the case of a second rescheduling, the extension will be limited to 20 percent of the remaining tenure. For third and fourth rescheduling, the repayment period will be restricted to the existing remaining tenure only.
To ensure credit discipline, the central bank has imposed strict conditions. The total loan period, including any extensions, must not exceed the original tenure approved at the time of sanction. For example, a loan initially sanctioned for 20 years cannot be extended beyond 20 years from its original commencement.
Banks must also ensure that the entire loan is repaid before the borrower reaches 65 years of age, with the final installment date capped at the borrower’s 65th birthday. All original loan documentation must be verified, and all regulatory requirements must be met prior to approval.
The circular further states that if a rescheduled housing loan is taken over by another bank or financial institution, the rescheduling sequence will remain cumulative and carry over from the previous lender. Borrowers must submit a formal declaration of their rescheduling history to prevent misuse and ensure transparency.
For issues not specifically covered in the revised guidelines, including mandatory down payment requirements, the provisions of BRPD Circular No. 16/2022 will remain applicable.
The directive, issued under Section 49(1)(ch) of the Bank Company Act, 1991, applies to all scheduled banks in the country and takes effect immediately.
Source: BSS
Bd-pratidin English/ Jisan
