The Bangladesh Bank is preparing a Tk40,000-crore refinance scheme aimed at reviving closed and inactive factories in Bangladesh, with the broader objective of restoring production, protecting employment, and strengthening export capacity amid ongoing economic pressures.
Officials said a detailed policy proposal is being finalised this week for submission to the Prime Minister for approval. Following approval, the central bank will issue an implementation circular to operationalise the scheme.
The proposed package will be distributed across three major sectors, prioritising both large-scale industrial recovery and smaller enterprise support, alongside agriculture:
| Sector |
Allocation (Tk crore) |
Focus area |
| Large industries |
20,000 |
Restart of major factories |
| CMSMEs |
10,000 |
Revival of cottage, micro, small and medium enterprises |
| Agriculture |
10,000 |
Support for production and rural activity |
The funds will be provided as short-term working capital loans with repayment periods of between one year and 18 months. The aim is to enable previously operational but now distressed factories to restart production lines, reactivate machinery, and re-enter domestic and export markets.
A senior official of Bangladesh Bank said the scheme will target enterprises that were functioning but became financially stressed due to post-Covid disruptions, global shocks linked to the Russia–Ukraine conflict, and volatility in foreign exchange markets. Preference will be given to firms with confirmed orders and proven demand to ensure effective use of funds.
More than 1,200 closed or partially operating factories have already been identified through data gathered from banks and trade organisations. These units have been categorised according to loan size, including groups with outstanding exposures above Tk100 crore and those below that threshold. The central bank has also held discussions with commercial bank managing directors to assess sectoral financing needs and identify viable borrowers.
In cases involving loan defaults, selected firms may be allowed to reschedule existing liabilities under relaxed conditions before becoming eligible for the new refinancing facility.
A key issue under discussion is the funding source. While direct financing by the central bank is under consideration, officials have acknowledged that such a move could increase liquidity in the banking system and raise inflationary risks. Banks are expected to access funds from the central bank at interest rates of around 5–6 percent, while lending rates to borrowers will be set above inflation but below the policy rate.
The initiative follows policy directions linked to Prime Minister Tarique Rahman, who has emphasised reopening closed industrial units and safeguarding workers’ livelihoods.
Previous support measures include Tk525 crore provided to the Beximco Group to clear wage arrears for around 27,000 workers across 14 closed factories, and policy assistance to the Nassa Group to restore trade financing operations, which helped protect employment for approximately 25,000 to 27,000 workers.
Economists have broadly welcomed the initiative but stressed the need for caution. The Centre for Policy Dialogue has noted that while the scheme could help revive production and employment, its effectiveness will depend on funding design and implementation discipline. Experts have also emphasised the importance of distinguishing between viable and non-viable factories before disbursing funds, warning that prolonged support to non-viable units could create long-term fiscal strain.
Concerns have also been raised about inflationary pressure if the entire package is financed through monetary expansion. Analysts have pointed to potential liquidity multiplication effects in the banking system, which could amplify price pressures and complicate inflation control objectives.
Officials further noted that lessons from pandemic-era stimulus programmes, which included Tk128,303 crore across 23 packages in 2020, highlight the importance of strict monitoring. A portion of those funds later turned into non-performing loans, reinforcing the need for safeguards, eligibility screening, and oversight mechanisms to prevent misuse and ensure productive deployment of the new scheme.
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