In a bid to revive businesses struggling under mounting debt, Bangladesh Bank has introduced a fresh policy framework aimed at providing targeted financial relief to borrowers. The central bank, in a circular issued last Sunday, announced that following requests from various banks and stakeholders, measures including relaxed down payment requirements and extended implementation timelines would be put into effect. Experts have hailed the move as a significant step towards stabilising vulnerable industrial sectors, though bankers have cautioned that some borrowers might attempt to exploit the increased flexibility.
Key Features of the Revised Policy
| Aspect | Details |
|---|---|
| Down Payment Requirement | Borrowers now need to pay 50% of the predetermined amount immediately, with the remaining 50% payable within six months. |
| Extended Implementation Timeline | Banks may grant an extension of up to three months if legitimate reasons prevent timely compliance. |
| Interest & Terms | Banks are instructed to make decisions regarding interest and other conditions in accordance with existing regulations, the bank–client relationship, and applicable directives. |
| Applicable Scope | Targeted at high-risk or distressed borrowers in industrial and business sectors. |
Under the revised guidelines, eligible borrowers can benefit from staggered down payments, easing immediate cash flow pressures. Banks are advised to exercise due diligence when determining interest rates and other terms to prevent misuse of the flexibility.
Background and Committee Actions
In January last year, Bangladesh Bank formed a five-member committee, led by the Executive Director of the Offsite Supervision Division, tasked with developing policy assistance for corporate borrowers facing regulatory and financial stress. The committee conducted its work through tripartite meetings, involving borrower organisations, financing banks, and committee representatives, concluding on 30 September last year.
Earlier, on 16 September, the central bank had unveiled a comprehensive special loan rescheduling policy, designed to maintain economic growth while supporting borrowers struggling to meet obligations.
Operational Impact
According to Bangladesh Bank, nearly 300 companies applied for loan rescheduling or restructuring during the first nine months of the previous year, with a total exposure of around BDT 200,000 crore. Syed Mahbubur Rahman, Managing Director and CEO of Mutual Trust Bank, observed: “This flexibility from Bangladesh Bank can help distressed industrial enterprises recover, especially at a time when the national economy is under pressure.”
Anis A. Khan, former chairman of the Association of Bankers, Bangladesh, noted: “With a newly elected government, this decision provides a timely opportunity to restore production and services in affected businesses. It is an important relief for entrepreneurs.” He added that the period should be leveraged to rebuild damaged infrastructure, and the central bank’s initiative could guide the industrial sector out of crisis.
Through a combination of regulatory support and banking cooperation, indebted enterprises now have a structured pathway to regain stability and resume growth with renewed momentum.