The Bangladesh Bank on Monday relaxed the exit policy for loan defaulters, lowering the minimum down payment requirement to encourage wider adoption of the policy.
In a circular issued with immediate effect, the central bank stated that borrowers seeking an exit must now make a minimum down payment of 5 per cent of the outstanding loan amount in cash, down from the previous requirement of 10 per cent.
The bank must process and resolve the application within 60 days.
The approval authority for the exit facility remains with the bank鈥檚 board of directors or executive committee.
The policy allows defaulters an exit option if recovery prospects are low, if a business or project has been closed due to unavoidable circumstances, or if the borrower has ceased operations.
Under this policy, loans must be repaid in one or multiple installments within two years, with a possible one-year extension under valid conditions.
BB officials said that a non-performing loan could be rescheduled with a down payment ranging from minimum 2.5 per cent to maximum 4.5 per cent.
In comparison, the requirement of a 10-per cent down payment for closed or loss-making factories was too stringent and that is why the condition has been relaxed, they added.
On March 6, Bangladesh Bank governor Ahsan H Mansur agreed to allow the rescheduling of defaulted loans taken by the Bashundhara Group, one of the country鈥檚 industrial conglomerates.
The decision was made at a meeting between Mansur and Bashundhara Group chairman Ahmed Akbar Sobhan on Thursday at the Bangladesh Bank鈥檚 headquarters in the capital Dhaka.
The new circular reaffirmed that the defaulted loans under the exit facility cannot be rescheduled or restructured.聽 If a borrower fails to repay under this facility, the bank must take legal action to recover the loan.
However, the circular has expanded the authority of bank management in approving principal loans of up to Tk 20 lakh.
Other provisions outlined in the previous circular remain unchanged.
On July 8, 2024, Bangladesh Bank introduced the exit policy as part of its efforts to curb the growing volume of bad loans in the banking sector.
Banks are required to develop their own exit policies, approved by their board of directors, ensuring compliance with the central bank鈥檚 guidelines without introducing more lenient terms.
Borrowers opting for the exit facility will remain ineligible for new loans until their outstanding obligations are fully settled.
In the case of written-off loans, banks must adhere to existing guidelines.
Additionally, proper provisioning must be maintained against loans under this facility, and collateral cannot be released before full adjustment of the loan.
The policy revisions come amid a surge in defaulted loans, which reached a record Tk 3.45 lakh crore at the end of December 2024, up from Tk 1.45 lakh crore in December 2023, Tk 1.20 lakh crore in December 2022, and Tk 1.03 lakh crore in December 2021.
