BB plans special refinance fund to reopen closed factories

FE Team | Published: April 29, 2026 23:49:03

Bangladesh Bank is planning to form a special refinance fund to provide low-interest loans for reopening closed industrial units, aiming to boost employment across the country, reports UNB
According to central bank sources, a high-level 19-member committee, led by Deputy Governor Dr. Md. Kabir Ahmed, has been formed to determine the structure of the fund. The committee will evaluate whether the fund will be financed by the government or from the central bank's own resources and will submit a comprehensive report detailing the necessary financial and policy support.
The initiative is being aligned with the government's broader employment targets. Specifically, it seeks to support the goal of creating one crore jobs within the first 18 months, as outlined in the Bangladesh Nationalist Party (BNP) election manifesto.
The plan will prioritize viable industrial units that were forced to shut down during the July uprising. However, firms involved in fraud, money laundering, or major financial crimes will be excluded from this facility.
The proposed assistance package includes several key measures to ease the burden on struggling industries:
Relaxed downpayment conditions for regularizing existing loans, new low-interest funding facilities, enhanced banking support for import and export activities, and opportunities to open Letters of Credit (LCs) with lower margins.
Banks will be authorized to provide these benefits based on the track record and behaviour of the clients prior to the factory closures.
Despite the potential benefits, the International Monetary Fund (IMF) has raised objections to the formation of new refinance funds.
The IMF suggests that existing funds should be gradually phased out rather than creating new ones. The organization expressed concern that new central bank financing could inject excess liquidity into the market, potentially fuelling further inflation.
Data Collection Underway:
Bangladesh Bank has already started collecting a list of closed factories that were established with bank financing. Arif Hossain Khan, Executive Director and spokesperson of the central bank, stated that a complete report based on the collected data will be submitted to the government soon.
In light of the IMF's concerns, the central bank is also reportedly exploring alternative methods to revitalize closed industries without destabilizing the broader economy.