B Mirror Report: Bangladesh Bank has extended the deadline for rescheduling defaulted loans under special policy support, allowing borrowers to regularize loans with only a 2 percent down payment.

According to a circular issued on Thursday and sent to all banks, borrowers will now be able to reschedule defaulted loans until June 2026 for a 10-year term with a two-year grace period.

The central bank’s latest move comes amid criticism that repeated rescheduling facilities are being used to artificially reduce non-performing loans (NPLs). Under a previous special rescheduling scheme, banks reportedly reduced classified loans by Tk 87,298 crore during the final three months of last year.

The new circular also relaxes earlier restrictions on borrowers who received one-time exit facilities. Previously, such borrowers were barred from obtaining any new loans until the full repayment of their restructured liabilities. Under the revised rules, they will not be eligible for additional credit from the same bank beyond existing facilities, but may seek loans from other banks.

The circular further states that special rescheduling facilities will remain available until June 30 for unclassified loans and loans that became adversely classified by March this year. Banks must settle applications within three months of submission.

Bangladesh Bank also clarified that applications for policy support will not become effective until the down payment amount is realized in cash. Institutions that already received special facilities through the policy-support selection committee will not be eligible for further rescheduling under the same mechanism.

The central bank had first formed a special committee in January last year to review applications for loan rescheduling and restructuring. Around 1,200 applications were submitted to the committee. However, the process faced criticism due to the absence of clear policy guidelines and the inclusion of external representatives on the committee.

Controversy intensified after allegations surfaced that one committee member, who was also a loan defaulter, benefited from the special facility. Allegations of unethical financial dealings involving another committee member and several central bank officials were also raised in connection with approving rescheduling benefits.

Following the controversy, Bangladesh Bank issued formal circulars to regulate the process. A directive issued on September 16 last year initially allowed applications for special facilities on defaulted loans until June 2025. Later, another circular issued on November 24 extended the opportunity for rescheduling, restructuring, and one-time exit facilities for loans classified until November 30 of that year.

The latest extension marks another continuation of the special loan restructuring support aimed at easing pressure on borrowers and the banking sector.