Dhaka, Dec. 20 -- The Bangladesh Bank has relaxed its already flexible loan repayment policy, as they said the real income of borrowers has fallen due to the severe impacts of the prolonged Russia-Ukraine war. Now, borrowers will be allowed to avoid being classified as a defaulter if they clear 50 per cent of their instalments payable in the final quarter of 2022 instead of 75 per cent previously.

Insiders expressed their worries that the relaxed policy would deepen the liquidity stress in the banking sector as lenders will not get back the expected amount of funds from borrowers. Banks in Bangladesh are already struggling to mobilise deposits owing to the negative returns on savings for the higher inflation and erosion of confidence amo...