In a decisive move to stabilise the national economy and provide a “clean slate” for struggling enterprises, the Bangladesh Bank has unveiled a generous loan regularisation policy. Under this new directive, businesses affected by the recent socio-political transition may regularise their non-performing loans (NPLs) by providing a down payment of just 2%. This initiative aims to revitalise the industrial sector and safeguard the livelihoods of millions dependent on these businesses.
Extended Tenures and Moratoriums
The central bank’s Banking Regulation and Policy Department issued a circular on Thursday detailing the liberal terms of this scheme. Borrowers who qualify will be granted a maximum repayment period of ten years to clear their liabilities. To ensure these businesses have sufficient time to recover their cash flows, the policy includes a two-year grace period (moratorium) on payments.
However, this facility is strictly targeted. It applies only to loans that were officially classified as defaulted as of 31 March. Furthermore, any entity that has previously availed of similar policy support or special rescheduling facilities will be ineligible for this specific round of assistance.
Application Process and Deadlines
Speed is of the essence for both banks and borrowers. To benefit from this scheme, companies must submit their formal applications to their respective lending institutions by 30 June. Once an application is received, the bank’s board of directors must resolve the case within three months.
Key Features of the Debt Regularisation Scheme
| Feature | Specification |
| Minimum Down Payment | 2% of the outstanding amount |
| Maximum Repayment Term | 10 Years |
| Grace Period (Moratorium) | 2 Years |
| Eligibility Date | Defaulted by 31 March |
| Application Deadline | 30 June |
| Settlement Type | Rescheduling or One-time Settlement |
| New Credit Restriction | No new loans until existing debt is cleared |
Transparency and Risk Management
The central bank has introduced stringent accounting safeguards to prevent the manipulation of financial statements. Banks are prohibited from transferring previously held specific provisions (security reserves) into their income accounts until the debt is fully recovered. Furthermore, those opting for a one-time settlement will be given a 12-month window to repay the total amount, with no “No Objection Certificate” (NOC) required from the Bangladesh Bank, thereby streamlining the process.
The Economic Context
This policy comes amidst a broader effort by the interim administration to reopen shuttered factories and create ten million new jobs. The banking sector has historically been plagued by corruption and large-scale scams involving major conglomerates like the S. Alam and Beximco groups. Under the previous administration, NPLs skyrocketed from 22,481 crore BDT in 2009 to over 211,000 crore BDT by mid-2024.
While critics have questioned the integrity of offering such broad concessions to 300 major industrial groups, the central bank maintains that these steps are essential to reflect the true health of the banking sector while allowing honest, albeit distressed, businessmen a path back to solvency. Statistics show that similar rescheduling efforts last year helped reduce defaulted loans from 35.73% to 30.60% in a single quarter.