Loan rescheduling relaxed, businesses receive relief

The Bangladesh Bank has eased loan rescheduling conditions to support struggling industries and prevent a further spike in defaulted loans—a move broadly welcomed by the business community.

In a circular issued on Sunday by its Banking Regulation and Policy Department (BRPD), the central bank allowed distressed borrowers to pay only half of the required down payment—equivalent to 2% of the total outstanding loan—at the time of approval. The remaining 50% can be paid within six months from the effective date.

Previously, borrowers had to deposit the entire stipulated down payment upfront to qualify for rescheduling or restructuring facilities.

Under the revised guidelines, eligible borrowers can now pay the one-time deposit in instalments. If policy support had already been approved but could not be implemented for valid reasons, banks may extend the earlier deadline by up to three months. The deadline for special loan restructuring has also been extended from 31 December 2025 to 31 March 2026.

The central bank said the decision followed requests from various scheduled banks and stakeholders seeking greater flexibility in implementing earlier policy directives.

On interest-related matters, banks have been instructed to act in line with existing policies, considering banker-customer relationships and applicable regulations.

Business community sees positive signal

Business leaders described the move as timely and supportive, particularly at a time when investment has slowed, construction activity has weakened, non-performing loans (NPLs) have surged past 35%, and borrowing costs remain between 14% and 16%.

Ashraf Ahmed, former president of the Dhaka Chamber of Commerce and Industry, called the decision “timely and appropriate,” noting that previous restructuring rules had been excessively restrictive.

He told the Daily Sun, “This is a welcome relief, as many businesses are struggling amid very tight market conditions in both product and finance markets. We also hope Bangladesh Bank will consider capitalising uncollected interest by banks, which in many cases is the core source of stress. It would also help to frame prudential regulations aligned with market realities in Bangladesh.”

Anwar-ul Alam Chowdhury Parvez, president of the Bangladesh Chamber of Industries, praised the central bank’s structured approach.

“Shutting down an industry is easy, but overcoming political, climatic and global shocks is not. This initiative will help unintentionally affected industries recover and restore business confidence,” he told the Daily Sun, adding that careful scrutiny by banks would ensure that genuine borrowers benefit.

Shams Mahmud, president of the Bangladesh Thai Chamber of Commerce and Industry, said genuine borrowers often fall into default due to unavoidable events such as strikes or factory closures.

“In such cases, an exit policy is essential. Unlike past rescheduling drives that favoured influential groups, this initiative has the potential to assist real victims and support broader economic recovery,” he said.

Details of the facility

Under the new instructions, half of the required 2% down payment for rescheduling and one-time settlement must be paid at the time of application, with the remaining amount payable within six months. Borrowers who previously failed to regularise their loans due to inability to deposit the full one-time amount will now get another opportunity. The board of directors of the respective financing institution may also decide on interest waivers in line with existing policies and banker-customer relationships.

For affected businesses—including those impacted by political instability or exchange rate volatility—the maximum restructuring tenure will be 10 years, with a two-year grace period if the loan is regularised. Banks must dispose of applications within six months of receipt, and no separate no-objection certificate from the central bank will be required.

In one-time settlement cases, borrowers will now need to deposit 5% of the outstanding balance to apply, down from the previous 10%.

If the principal loan amount is up to Tk20 lakh, the bank’s management committee may decide on granting exit facilities. For loans exceeding Tk20 lakh, the board of directors or executive committee will make the final decision.

Addressing rising defaults

According to central bank data, total loans in the banking sector stood at Tk17,41,700 crore at the end of September last year, of which 36.3% were classified as defaulted.

Around 300 companies, including several large conglomerates, applied for loan rescheduling or restructuring facilities amounting to nearly Tk2 lakh crore in the first nine months of last year.

Bankers say that while strict monitoring will be essential to prevent misuse by wilful defaulters, the latest concessions could provide temporary but crucial relief to viable businesses, restore confidence and help contain a further rise in defaulted loans during a fragile recovery phase.