BB offers yet another rescheduling facility for troubled businesses

Bangladesh Bank has introduced a special loan-related policy support for firms whose business operations were disrupted prior to the July political transition.

According to a circular issued Tuesday (September 16) by the central bank's Banking Regulations and Policy Department, affected businesses will be allowed to reschedule classified loans for up to 10 years, including a maximum grace period of two years.

The policy aims to provide relief to investment-and employment-generating enterprises that have been struggling due to factors beyond their control, including economic slowdown, currency volatility, and utility disruptions.

The central bank says these firms have faced difficulties servicing their loans, which has in turn disrupted banking operations and posed risks to the broader economy.

Borrowers may refrain from paying principal or interest for up to two years during the grace period.

Affected firms now must apply to their respective banks by December 31, 2025.

Classified risky loans can be rescheduled for a maximum of 10 years with a two-year grace period, effective until June 30, 2025.

A minimum cash down payment of 2.0 per cent is required. For loans previously rescheduled three or more times, the down payment will be 3.0 per cent.

The revised interest rate can be set at 1.0 per cent lower than the lowest lending rate of the relevant sector.

Installments must be paid monthly or quarterly.

Deferred interest cannot be booked as income until realized, and overdue installments will result in reclassification.

Banks are instructed to assess the repayment capacity of borrowers, with the option to engage third-party auditors if needed.

For loans above Tk 3.0 billion, unresolved cases may be referred to the Bangladesh Bank-sponsored Policy Assistance Scrutiny Committee.

Applications must be approved by the lending bank's board of directors. In cases involving multiple lenders, the lead bank will coordinate.

The facility, however, will not apply to loans obtained through fraud, deception, or to borrowers declared as willful defaulters.

The circular came into effect on September 16, and applications will remain open until December 31, 2025.

jasimharoon@yahoo.com