Large Defaulters Get 15 Years to Repay Tk 1,000 Crore Plus Loans: BB

TBS Report, Dhaka — Defaulting borrowers with loans exceeding Tk 1,000 crore will now be eligible for loan rescheduling for up to 15 years, including a two-year grace period, under an extended policy support scheme introduced by the Bangladesh Bank — a significant extension of the previous 10-year repayment tenure that signals the central bank's willingness to accommodate large industrial borrowers affected by the gas and power crisis.

The central bank extended the deadline for borrowers to avail themselves of the policy support facility until 30 September 2026, issuing a circular on 31 August 2026 instructing all scheduled banks to comply with the new provisions. The move forms part of Bangladesh Bank's broader 18-month roadmap to reduce non-performing loans (NPLs), with the policy support available for the first six months until 31 December 2026.

📜 Eligibility Conditions

The new policy support facility offers different pathways depending on loan classification status:

• ✅ Unclassified loans (including standard and special mention accounts): eligible for special restructuring facilities
• 📉 Adversely classified loans (sub-standard, doubtful, bad/loss): eligible for special rescheduling facilities
• 💰 Borrowers with loans exceeding Tk 1,000 crore: up to 15 years including 2-year grace period
• 💰 Borrowers with loans below Tk 1,000 crore: up to 10 years including 2-year grace period (unchanged from previous policy)

For applications under the facility, banks must complete the process by 31 December 2026 after receiving all required down payments, according to the circular. Borrowers who have previously received policy support despite having loans exceeding Tk 1,000 crore — either individually or as part of a group — can apply again for facilities of up to 15 years.

📊 Strategic Rationale: Gas Crisis and Export Pressure

Officials of the central bank told press that Bangladesh's exports, like those of other countries, are facing temporary headwinds due to the ongoing conflict in the Middle East. Fuel shortages have disrupted production at export-oriented industries, weakening borrowers' repayment capacity. At the same time, market-based interest rates have significantly increased borrowing costs amid a business slowdown.

"As part of Bangladesh Bank's 18-month roadmap to reduce non-performing loans, the central bank has introduced this policy support for the first six months, until 31 December 2026," the circular stated. The facility provides temporary additional time for borrowers, particularly large ones with loans of Tk 1,000 crore or more, to reschedule or restructure their loans.

🔄 Existing Facilities Extended

The latest circular also allows institutions that previously received policy support despite having loans exceeding Tk 1,000 crore, either individually or as part of a group, to apply again for facilities of up to 15 years. Therefore, a borrower with loans exceeding Tk 1,000 crore that has already received a rescheduling facility for 10 or 12 years can apply again to extend the repayment period to up to 15 years, subject to the applicable conditions.

Under the previous circular, borrowers had until 30 June 2026 to apply for the facility, while the maximum rescheduling period was 10 years. The new circular extends both the application window and the maximum tenure — reflecting the central bank's acknowledgement that the gas and power crisis has imposed deeper stress on industrial borrowers than originally anticipated.

💰 Special Restructuring Provisions

The BB circular also specifies that, in the case of special restructuring, banks may allow an additional tenure of up to four years beyond the previous tenure. The special loan rescheduling and restructuring facility will also be available to borrowers who have previously received policy support under the 2025 circular or from the selection committee formed to provide restructuring support.

However, any grace period already enjoyed by such borrowers will be counted as part of the grace period allowed under the latest instruction. Their repayment tenure may then be extended accordingly. This prevents double-counting of grace periods while still allowing borrowers to extend their overall repayment timeline.

📜 Historical Context: 2025 Rescheduling Framework

Loan defaulters were offered concessions earlier in 2025. A Bangladesh Bank circular issued on 16 September 2025 said borrowers would have to deposit at least 2 per cent of their existing outstanding defaulted loans in cash, based on the relationship between the bank and the borrower. If the loan was regularised, borrowers would be given 10 years to repay it, including a two-year grace period.

However, if a loan had previously been rescheduled three or more times, an additional 1 per cent deposit would have to be made. Bangladesh Bank instructed banks to reschedule loans after properly considering the extent of losses suffered by genuinely affected borrowers and the prospects of their businesses recovering. The validity of that facility has already expired, and the opportunity has now been offered again under a new arrangement.

🏛 Why Large Borrowers Need More Time

Bangladesh Bank officials told Prothom Alo that the facility has been reintroduced to reduce defaulted loans and help restart industrial operations. Production has been disrupted by the ongoing gas and electricity shortages, causing the loans of several major industrial groups to become classified as bad loans. The additional concessions for defaulters with more than Tk 10 billion in loans have primarily been introduced to support these businesses — reflecting the strategic recognition that large industrial groups employ thousands of workers and underpin significant portions of Bangladesh's export earnings.

The 660 textile mills affected by gas supply disruptions since July 2026, the 62 power plants facing generation disruptions, and the broader industrial slowdown have together pushed many large borrowers into NPL status — despite their underlying businesses remaining commercially viable if given sufficient time to recover. The 15-year rescheduling framework is designed to provide that breathing room.

📊 Strategic Implications for Banking Sector

The 15-year extension carries significant strategic implications:

• 💰 NPL reduction: the central bank's 18-month roadmap aims to materially reduce non-performing loans across the banking sector
• 🏛 Sammilito Islami Bank restructuring: the 10,000 recovery cases filed by the merged bank will benefit from the extended rescheduling framework
• 👥 Industrial employment protection: preventing large factory closures by giving borrowers more time to recover
• 📊 Capital adequacy: by reducing classified loans, banks' capital adequacy ratios will improve
• 🌏 Export stability: supporting large export-oriented borrowers helps sustain Bangladesh's $48 billion annual export earnings

The decision also aligns with Bangladesh Bank's broader policy support framework — including the Tk 60,000 crore stimulus package with 17 banks signing for Tk 41,000 crore disbursement, and the Tk 13,000 crore agricultural refinance scheme with interest rates capped at 7 per cent. Together, these measures represent a comprehensive response to the dual challenges of industrial stress and banking sector reform that Bangladesh faces through the LDC graduation transition period beginning November 2026.