BB launches Tk20,000cr scheme to revive closed factories; money launderers barred

The government has formed a Tk20,000 crore pre-financing scheme to revive closed industrial and service sector enterprises, aimed at bringing idle units back into operation through liquidity support from banks' surplus funds.

The fund is part of the government's earlier-announced Tk60,000 crore "production and employment revival" stimulus package, designed to restart shuttered factories, revive stalled exports, and generate jobs for unemployed youth through targeted credit support.

A central bank circular yesterday said the pre-financing scheme will run for three years. Borrowers involved in loan default, money laundering, fraud, or misuse of earlier credit facilities will not be eligible.

Banks will pay interest at a rate of 4%, while borrowers will be charged up to 7%. Interests will be waived for the first six months, after which regular repayment will begin.

The maximum loan ceiling under the scheme is Tk200 crore per entity or group. Each loan will have a tenure of up to one year, with renewal possible depending on fund availability and satisfactory repayment performance.

Who can participate

All scheduled banks may participate, but must sign agreements with Bangladesh Bank.

Eligible borrowers include large-scale industrial and service sector entities that are partially or fully shut, or operating below capacity due to working capital shortages. 

Export-oriented firms and those with high export potential will receive priority. Investors taking over or leasing closed units to restart operations will also be prioritised.

Before approving loans, banks must assess the actual condition of the enterprise, production capacity, capital needs, and repayment ability. Support is intended only to address working capital gaps, not structural failures caused by mismanagement, or technical inefficiency.

Certification from relevant trade bodies such as the FBCCI, BGMEA, and BKMEA will be required to verify operational capacity. However, banks may also approve loans based on their own due diligence and investigation.

Loan proceeds cannot be used to adjust or repay existing loans. Instead, funds may be used for wages and salaries, utility bills, raw material procurement, execution of export orders, and other production-related costs.

Wage payments must be made through bank accounts or mobile financial services, not in cash. Verification of national identity cards for workers is mandatory. Salary support will be limited to a maximum of four months.

The circular said borrowers identified as loan defaulters, or individuals and entities involved in money laundering, fraud, embezzlement, or misuse of loan funds, will not be eligible.

Recovery, supervision

On recovery and supervision, the circular states that interest or profit on the borrowed funds must be paid quarterly to Bangladesh Bank. 

In case of default, funds may be recovered directly from banks' current accounts held with the central bank, along with an additional 2% penalty interest.

Banks will bear full credit risk and remain solely responsible for loan recovery. The central bank will not be linked to recovery from customers under any circumstances. Defaulting borrowers will be treated under existing classification and provisioning rules.

To ensure proper use of funds, banks must submit weekly reports on beneficiary enterprises and conduct quarterly factory inspections. Bangladesh Bank may also carry out on-site inspections at any time.

Any misuse detected during inspection or audit will result in direct recovery from the bank's account, including interest and an additional 2% penalty.

Banks must follow their internal policies for borrower selection, approval, disbursement, documentation, and monitoring. They may take collateral against working capital loans, subject to existing single borrower exposure limits.

Even previously written-off loans may be considered for rescheduling or policy support under specific conditions. Such borrowers will not be classified as defaulters initially but will be recorded as SMA accounts. However, failure to repay six consecutive monthly or two quarterly instalments will result in reclassification as substandard or bad loans.

If fraud, false information, irregularities, or misuse is detected, the borrower's details may be shared with relevant government agencies for legal and punitive action. Disciplinary measures will also be taken against any bank officials found involved.