Cenbank extends special policy support for distressed borrowers until 30 June

The Bangladesh Bank has extended the tenure of its special policy support for distressed borrowers until 30 June in a move aimed at helping businesses recover from financial stress and reducing mounting pressure from default loans in the banking sector.

The central bank issued a circular today (7 May), outlining fresh instructions to ensure implementation of the policy support framework introduced in 2025 for affected borrowers.

Under the revised guidelines, borrowers will be allowed to apply for loan restructuring and special policy facilities until 30 June this year. The Bangladesh Bank has also extended the deadline for rescheduling classified loans under special conditions.

Borrowers who have already availed themselves of the facility or received support from the policy support selection committee formed for business and financial restructuring will not be eligible to apply again.

Loans that have not yet become classified or remain regular will be eligible for fresh restructuring under the special facility until 30 June.

Meanwhile, loans that have already turned bad or classified will be allowed to be repaid in instalments under special rescheduling terms up to 31 March this year, enabling such accounts to receive special rescheduling support.

The Bangladesh Bank also instructed banks to dispose of applications within a maximum of three months after receiving them. However, the three-month period will begin only after encashment of the down payment cheque or any other payment instrument. No application will become effective before the realisation of the down payment.

Fresh rules for exit facilities

The central bank also issued new instructions regarding loan accounts receiving special exit facilities.

According to the circular, such loans must be identified as "exit" accounts and banks will be required to maintain general provisions in line with existing regulations. Previously maintained specific provisions cannot be shown as income unless actual recovery is made.

The circular further stated that no institution receiving special exit facilities will be eligible for fresh loans beyond existing credit limits until the entire outstanding amount is repaid.

At the same time, Bangladesh Bank withdrew an earlier requirement under which banks had to seek approval from the central bank's selection committee before extending policy support to borrowers with loans amounting to Tk300 crore or more.

Default loans continue to surge

According to Bangladesh Bank data, total outstanding loans in the country's banking sector stood at Tk18.20 lakh crore at the end of December 2025.

Of the total, default loans amounted to Tk5.57 lakh crore, accounting for 30.60% of all outstanding loans in the banking system.