S Alam Khan; Dbarta24 – Bangladesh Bank has introduced relaxed restructuring guidelines allowing defaulted loans exceeding BDT 1,000 crore to be rescheduled for up to 15 years, including a two-year grace period.
The central bank issued the directive to commercial banks, extending the deadline for borrowers to apply with a minimum 2% down payment until September.
Under the updated provisions, entities that previously received special policy support can reapply to restructure their obligations.
For undefaulted active loans, financial institutions may extend existing terms by adding 50% of the remaining duration plus an additional four years.
Loans under BDT 1,000 crore remain eligible for a 10-year restructuring window with a two-year grace period. All pending applications under this framework must be resolved by December.
“Instead of focusing on recovery to reduce default loans, sweeping concessions are pushing us backward,” stated a Managing Director of a private commercial bank. “A two-year grace period disincentivizes even capable borrowers from making timely payments. Support should be granted on a case-by-case basis to genuinely distressed businesses rather than through blanket relaxed policies.”
The policy shift follows fluctuating non-performing loan (NPL) figures across the national banking system. NPLs stood at BDT 211,391 crore (12.56% of total loans) in June 2024.
Following updated reporting frameworks, default figures reached BDT 644,515 crore (35.73%) by September, before adjusting down to BDT 557,217 crore after initial policy support rounds.
By March, total default figures rose to BDT 588,704 crore, accounting for 32.26% of all outstanding bank credit.
Central bank officials maintain the measures aim to assist impacted businesses in restructuring their operations and financial management.