BB offers easy loan rescheduling for pre-5 Aug troubled businesses

The Bangladesh Bank has introduced a special loan rescheduling facility for borrowers whose businesses suffered due to uncontrollable circumstances during Sheikh Hasina's regime. 

Under the new circular, borrowers may reschedule classified loans for up to 10 years by making just a 2% down payment.

The circular, issued yesterday, states that eligible borrowers will be allowed a grace period of up to two years. However, the down payment must be made in cash, and previously paid instalments cannot be counted towards it. Applications must be submitted by 31 December 2025.

The facility excludes loans created through fraud, forgery, or irregularities. According to the central bank's 2022 master circular, rescheduling previously required a minimum down payment of 2.5-4.5% with a maximum tenure of eight years. 

Under the new circular, for borrowers rescheduling loans for the third time or more, an additional 1% down payment will be required. Repayments must be made either monthly or quarterly, depending on the bank–client agreement.

Earlier, on 31 January, the central bank formed a policy support committee to address business losses. Since then, around 450 firms have benefited from rescheduling, though many were reportedly chosen on political grounds, with some even linked to fraudulent practices. Notably, one politically connected garment factory was granted an unprecedented 12-year interest-free rescheduling.

A senior Bangladesh Bank official told TBS that over 1,200 borrowers have already applied for relief under the policy support committee. "Since it is not feasible for the central bank to deal directly with clients, banks will now handle the applications. Borrowers who have already received benefits under the committee will not be reassessed," the official said.

The circular also clarified that specially rescheduled loans must be categorised as Special Mention Accounts (SMA), with banks required to maintain proper provisioning against them.

Bankers' reactions

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, called it a "significant facility." He said, "These institutions can benefit from this facility. However, there is no guarantee that this money will be returned. 

"The grace period is two years, so we do not know what will happen during that time. What happens if the customer does not repay the money after two years? A lot depends on whether the customer will repay the money in the future and whether they actually have the intention to return the money to the bank."

Terming the move positive, Masrur Arefin, managing director of City Bank, said, "Many things happen in reality. Many businessmen have genuinely been affected and unable to conduct business due to political reasons. These factories need to be kept running. We can give them a chance to do business. 

There is nothing wrong with this, as when a business shuts down, people's employment also ends." 

He argued that the arrangement could allow them to get back on their feet. "In that respect, I consider it a positive step."

Eligibility for policy support

The new facility is available to financially viable, affected borrower institutions. Priority will be given to those who have suffered due to uncontrollable and non-business circumstances, such as not receiving utility connections. 

It also applies to companies that have been affected by the devaluation of the taka against foreign currencies in the global supply chain. The policy prioritises those who have not previously received any policy support, such as loan rescheduling or restructuring.

Application process

The borrower must submit a written application within the stipulated timeframe, and the application must be lodged with the lead bank. At the time of application, the prescribed down payment or instalment must be deposited. Borrowers with classified loans up to 30 June 2025 will be eligible for rescheduling under this facility.

However, loans with an outstanding balance of more than Tk300 crore can only be rescheduled with the approval of the Bangladesh Bank. The bank will assess the borrower's financial capacity, willingness to repay, and the overall situation before approving the application.

Borrowers who have previously violated the terms of a loan rescheduling facility are not eligible for this new benefit. If an application is not submitted within the designated period or if the conditions are not met, it will be rejected. Similarly, loans exceeding Tk300 crore will not be rescheduled without the Bangladesh Bank's approval.