Bangladesh Bank has announced a series of measures aimed at easing the mounting pressure of record non-performing loans (NPLs) in the country’s banking sector, including a new exit policy, faster debt recovery through courts, and the creation of Asset Management Companies (AMCs).
Following the Monetary Policy Statement for the first half of the 2026–27 fiscal year (July–December) on Tuesday, Governor Mostaqur Rahman said during a Q&A session that the central bank is working on an 18-month roadmap to bring down default loans.
Under the plan, conventional loan rescheduling practices will be tightened, while efforts will be made to accelerate case disposal in Money Loan Courts and transfer toxic assets from banks’ balance sheets through AMCs.
As part of the roadmap, a new exit policy is expected to be introduced within the first six months to discourage prolonged default status through repeated “bullet payment” arrangements. The governor said that if a business is no longer viable, banks should be allowed to discontinue such facilities.
On legal reforms, Bangladesh Bank has proposed amendments to the Money Loan Court Act to expedite debt recovery, recommending that cases be resolved within six months instead of the years-long delays currently experienced.
The proposed Distressed Asset Management Act (DAMA) is also in its final stages. Once enacted, it will allow banks to offload non-performing or “toxic” assets to specialised Asset Management Companies, thereby removing them from bank balance sheets.
Banks are also being encouraged to write off inactive loans to present a more realistic picture of their financial health. However, the governor clarified that write-offs do not mean debt forgiveness, and legal action, including recovery proceedings, will continue against borrowers.
Bangladesh Bank also said it will strengthen supervision through international standards such as IFRS 9, risk-based monitoring, and special audits. Recent inspections of six banks reportedly uncovered irregularities in foreign currency transactions and IT systems, with strict action expected to follow.
The central bank said the combined implementation of the exit policy, fast-track legal processes, asset management mechanisms, international accounting standards, and stronger supervision is expected to bring visible improvements in default loan management from next year.
