Bangladesh Bank has introduced a special one-time exit facility for defaulted borrowers in an effort to curb the country’s surging non-performing loans (NPLs), strengthen banks’ lending capacity, and stimulate credit flow to productive sectors.
According to a central bank circular issued on Monday, commercial banks are now authorised to offer this special exit path for loans classified as “Bad/Loss” as of 30 June 2026.
The facility will remain effective until 31 December 2026, subject to the approval of respective bank boards and based on banker-customer relationships.
Bangladesh Bank said the sharp increase in defaulted loans has adversely affected the banking sector’s asset quality, liquidity management, and ability to extend fresh credit.
As a result, credit flow to productive sectors has been constrained, posing challenges to investment, employment generation, and sustainable economic growth.
To address the situation, the central bank said the facility is intended for borrowers who have fallen into financial distress for various reasons but still have the capacity to continue their businesses and demonstrate a genuine willingness to repay their loans.
According to the circular, the initiative is expected to help banks recover long-overdue loans, reduce the volume of classified assets, and improve their capacity to finance productive sectors of the economy.
Under the special exit facility, borrowers must settle their entire outstanding liabilities through a one-time payment.
The central bank has also relaxed certain conditions contained in its previous circular issued in 2022 regarding the waiver of accrued and unaccrued interest.
The relaxation will give banks greater flexibility to waive interest in order to facilitate loan settlements.
For state-owned commercial and specialised banks, restrictions on interest waivers affecting income accounts have also been eased under the facility.
The circular further states that loans classified as Bad/Loss and rescheduled between 6 August 2024, and 30 June 2026, will also be eligible for the special exit facility.
However, instead of focusing solely on large conglomerates, Bangladesh Bank has explicitly directed banks to prioritise short-term agricultural loans alongside Cottage, Micro, and Small Enterprise (CMSME) accounts.
Banks have been instructed to proactively reach out to eligible borrowers via official correspondence and launch awareness campaigns to ensure widespread adoption before the December deadline.
Bd-pratidin English/ ANI
