The Bangladesh Bank (BB) on Monday relaxed its one-time 'Special Exit Facility' for default borrowers in a move aimed at reducing mounting non-performing loans (NPLs) and strengthening banks' capacity to extend fresh credit to productive sectors.
In a circular, the central bank said loans classified as 'Bad/Loss' as of June 30, 2026, would be eligible for the revised exit facility, subject to approval by the respective bank's board of directors and assessment of the bank-customer relationship.
Under the scheme, borrowers will have to settle their entire outstanding liability through a one-time payment to avail themselves of the facility.
The central bank also relaxed previous conditions governing the waiver of imposed and non-imposed interest.
Earlier requirements related to recovering the cost of funds and restrictions on state-owned commercial and specialised banks from impairing income accounts to waive interest will no longer apply under the programme.
Loans classified as 'Bad/Loss' and rescheduled between August 6, 2024, and June 30, 2026, will also qualify for the Special Exit Facility, the circular said.
Banks have been instructed to prioritise short-term agricultural loans and lending to cottage, micro and small enterprises (CMSMEs) while implementing the programme.
The one-time facility, which offers significant concessions to eligible borrowers, will remain in force until December 31, 2026.
A Bangladesh Bank official, speaking on condition of anonymity, said the sharp increase in NPLs had weakened banks' asset quality, affected liquidity management and constrained their ability to extend fresh credit.
"The facility will allow commercial banks to recover stressed assets and help expand credit flows to productive sectors," the official said.
In a separate circular, the central bank capped the interest rate spread at 4 percentage points for all categories of loans except credit cards and consumer lending.
The BB said that since the introduction of the market-based interest rate regime in May 2024, no ceiling had been in place on the intermediation spread, allowing many banks to widen the gap by increasing lending rates more sharply than deposit rates.
The unusually high spread has raised financing costs for businesses and industries, hampering economic activity and industrial growth, the regulator said.
To address the issue, all scheduled banks have been instructed to maintain the weighted average spread between lending and deposit rates within 4 percentage points.
The central bank had previously imposed a ceiling on the interest rate spread in June 2018, but withdrew it on November 28, 2023, following criticism from various quarters.
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