Bangladesh Bank has expanded policy support for loan defaulters, allowing all non-performing loans classified as of November 30 this year to be rescheduled under a special facility.
The central bank says the move is aimed at helping distressed firms keep their businesses afloat and rebuild their financial structure.
In a circular issued on Monday, the central bank’s Banking Regulation and Policy Department (BRPD) said such loans can now be rescheduled for up to 10 years, including a maximum two-year grace period.
During this grace period, borrowers will not have to pay instalments, although they must continue paying interest.
According to the circular, any loan that became non-performing by 30 November will be eligible for the revised facility, but applications must be submitted to the respective banks within the same deadline.
The bank’s board will make the final decision on whether a borrower qualifies for the support.
In this circular the biggest policy shift is the extension of the restructuring timeframe. Under BRPD Circular No. 16/2022, the maximum tenure for rescheduling term loans was previously fixed between five and eight years.
The new instruction adds an extra two years to those limits. This means term loans – whether newly defaulted or previously rescheduled – may now be granted a longer repayment period through special restructuring.
Exit facilities have also been made more flexible. While the down-payment requirement remains unchanged, the duration of the exit facility may now be extended by one additional year.
Borrowers will have to repay their loans in monthly or quarterly instalments, and the total annual repayment must be at least 20 percent of the outstanding loan.
Throughout the exit period, the loans must be shown as “Exit (SMA),” and banks must maintain the required general provisions. No specific provision may be transferred to income unless the recovery is fully realised.
However, there is no relaxation regarding instalment discipline. If a borrower fails to pay three monthly instalments or one quarterly instalment, the loan must be reclassified according to the standard rules.
In addition, no new credit facilities may be approved in the borrower’s name until the entire outstanding amount is fully repaid.
