BB offers fresh loan relief to distressed borrowers

The Bangladesh Bank has introduced fresh policy support to facilitate the restructuring of businesses and financial arrangements of distressed borrowers, allowing eligible borrowers to apply to their respective banks by 30 September.

Borrowers who have already received policy support will also be eligible to apply again under the new facility.

According to a directive issued by the central bank on Monday, if the outstanding loan balance of a single borrower or group applying for the facility is Tk1,000 crore or more, banks may provide additional concessions for special rescheduling and restructuring based on the banker-customer relationship.

Under the facility, loans may be specially rescheduled for up to 15 years, including a maximum grace period of two years.

In the case of special restructuring, the loan tenure may be extended by up to four additional years beyond the existing tenure prescribed under relevant regulations.

For borrowers or groups with outstanding loans of less than Tk1,000 crore, however, the tenure and conditions specified in the earlier BRPD circular will apply.

According to the BB directive, unclassified loans – including STD-0, STD-1, STD-2 (standard) and SMA (special mention account) – may be brought under the special restructuring facility until 30 September.

Adversely classified loans, including sub-standard, doubtful and bad/loss loans, will be eligible for special rescheduling.

Borrowers who previously received policy support may also avail themselves of the new facilities. 

In such cases, any grace period already elapsed will be counted towards the new grace period, while the loan tenure may be extended where necessary.

All applications under the circular must be settled by the respective banks by 31 December 2026, after the required down payment is received.

BB said the circular was issued to provide temporary relief to distressed borrowers whose repayment capacity has been affected by global and domestic economic pressures, including the Middle East conflict, energy shortages, higher interest costs and a slowdown in business activity.

The central bank said the Middle East conflict has disrupted fuel supplies and temporarily affected production at export-oriented industries, while the market-based interest rate regime has significantly increased borrowing costs.

At the same time, slower business activity has weakened borrowers’ ability to repay loans.

Against this backdrop, and as part of its 18-month roadmap to reduce non-performing loans, BB has introduced the temporary policy support for the first six months of the roadmap, up to 31 December 2026.

The circular provides additional time and flexibility for special rescheduling and restructuring, particularly for large borrowers with outstanding loans of Tk1,000 crore or more.

The BB said all other instructions contained in previous circulars and subsequent directives will remain unchanged.