Bangladesh Bank Eases Support for Troubled Borrowers

In a bid to help businesses struggling under financial distress, Bangladesh Bank has authorised flexibility in the implementation of its policy support scheme, including easing down payment requirements and extending implementation deadlines. The move was outlined in a circular issued last Sunday, following requests from various banks and stakeholders seeking greater leniency in applying the earlier policy.

Senior bankers have welcomed the decision, noting that it could provide a lifeline to industrial sectors under severe strain. At the same time, they cautioned that deliberate defaulters might attempt to exploit the relaxed rules.

Key Policy Adjustments

Under the revised guidelines, eligible borrowers can now make down payments in instalments. Specifically, 50 per cent of the approved down payment must be paid immediately, while the remaining 50 per cent may be settled within six months. Furthermore, if policy support has been approved but cannot be implemented for valid reasons, banks are authorised to extend the deadline by up to three months. Decisions regarding interest rates and other financial terms are to be made in accordance with existing policies, the banker–client relationship, and relevant instructions issued by Bangladesh Bank.

Background

In January of last year, Bangladesh Bank formed a five-member committee, chaired by the Executive Director of the Offsite Supervision Department, to provide policy support for corporate borrowers who had become non-performing due to circumstances beyond their control. The committee operated through tripartite meetings involving the borrower institutions or groups and their financing banks, concluding its work on 30 September. Prior to this, on 16 September, the central bank had issued a Special Integrated Loan Restructuring Policy to assist distressed borrowers while maintaining economic growth.

According to Bangladesh Bank data, nearly 300 companies, including leading defaulting industrial groups, applied for loan restructuring or rescheduling amounting to almost BDT 200,000 crore in the first nine months of last year.

Syed Mahbubur Rahman, Managing Director and CEO of Mutual Trust Bank, remarked that the flexibility could enable vulnerable industrial establishments to recover during this challenging period. Meanwhile, Anis A Khan, former Chairman of the Association of Bankers, Bangladesh, noted that the decision provides a welcome opportunity to restore production and services to pre-crisis levels. He emphasised that borrowers should use this period to rebuild damaged infrastructure.

With the implementation of these measures, Bangladesh Bank hopes to stabilise distressed businesses, protect jobs, and sustain economic growth amidst ongoing financial pressures.