BB eases rescheduling terms to support struggling borrowers

The Bangladesh Bank (BB) has relaxed loan rescheduling conditions in a fresh bid to support struggling industries and prevent a further rise in defaults amid a fragile economic recovery.

In a circular issued on Sunday by its Banking Regulation and Policy Department (BRPD), the central bank allowed distressed borrowers to pay only half of the required down payment - equivalent to 2% of the total outstanding loan — at the time of approval.

The remaining 50% of the down payment may now be cleared within six months of the effective date.

Previously, borrowers were required to pay the entire stipulated down payment upfront to qualify for rescheduling or restructuring facilities.

Under the revised rules, eligible borrowers can now pay the required down payment in installments. Half of the stipulated amount must be paid at the time of approval, while the rest must be settled within six months.

The BB said the decision was taken following applications from various banks and stakeholders seeking flexibility in implementing earlier policy instructions.

Senior bankers welcomed the move, saying the flexibility could help distressed industries regain momentum at a time when investment has fallen to multi-year lows and construction activity has slowed sharply.

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However, they cautioned that some willful defaulters might attempt to take advantage of the softer terms.

The central bank also allowed banks to extend implementation deadlines by up to three months if previously approved policy support could not be executed due to valid reasons.

In addition, the deadline for special loan restructuring has been extended by three months -from 31 December 2025 to 31 March 2026.

Regarding interest-related issues, the BB instructed banks to make decisions in line with existing policies, based on banker-customer relationships and applicable guidelines.

Decisions on interest waivers may now be taken by the boards of the respective financing institutions within the framework of prevailing rules.