Bangladesh Bank has announced a major policy support package aimed at reviving struggling industries, allowing businesses to restructure loans for up to 10 years in an effort to restore financial stability and protect jobs.

In a circular issued on Tuesday (Sept 16), the central bank said the initiative is designed to help debt-burdened companies return to profitability through restructuring and other financial measures.

The move comes after political unrest in August 2024 and other unforeseen disruptions left many firms unable to maintain normal operations, leading to a rise in defaulted loans and threatening the stability of the banking sector.

Under the new framework, banks will not require prior approval from Bangladesh Bank to extend these facilities but must secure the consent of their boards. The aim is to safeguard employment and economic activity while ensuring loan recovery.

Eligibility and application
The scheme covers firms hit by external shocks — such as political turmoil, discrimination, delayed utility connections, global supply chain disruptions, or unexpected currency depreciation. Priority will be given to businesses that have not previously benefited from loan rescheduling or restructuring.

Borrowers must apply by 31 December, and banks are required to settle applications within six months.

Key features of the package
Non-performing loans as of 30 June 2025 can be rescheduled for up to 10 years, including a maximum two-year grace period. Borrowers will need to make a down payment of at least 2 percent of the outstanding loan, rising by one percentage point for those who have rescheduled three or more times.

Interest rates will be set individually but must remain at least 1 percent lower than the minimum rates specified in the policy. Installments can be paid monthly or quarterly, and interest accrued during the grace period can be collected in part or in full.

The policy also allows borrowers to access new loans or extend existing credit limits without settling compromised amounts, provided banks review their past transactions and overall financial position.

Additional measures
Unclassified term loans can be extended by up to two years, and regular loans can receive an additional one-year grace period under a special exit facility. Losses from foreign exchange fluctuations related to 2022 import bills will be accounted for under bank-determined procedures, with flexible repayment terms based on the lender–borrower relationship.

For large borrowers with outstanding loans of Tk 300 crore or more, interbank coordination meetings will determine restructuring terms. If consensus is not reached, cases will be referred to a special policy support selection committee.

Exclusions
The package excludes loans resulting from fraud or willful default, as well as those linked to directors or related parties, unless prior approval is granted by Bangladesh Bank. Rescheduled or restructured loans will be classified as Special Mention Accounts (SMA) and require appropriate provisioning.

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