B Mirror Report: Bangladesh Bank has relaxed key lending restrictions, allowing banks to provide larger loans to single borrowers and industrial groups in a move aimed at easing pressure on business financing and expanding trade finance capacity.

Under a new circular issued on Thursday, banks can now extend loans of up to 25% of their total capital to a single borrower or business group, up from the previous ceiling of 15%. The revised limit takes immediate effect and will remain in place until June 30, 2028.

The central bank said the decision is intended to reduce constraints on business financing and support larger corporate borrowing needs.

For example, a bank with Tk1, 000 crore in capital could previously lend up to Tk150 crore to a single group. Under the new rule, that exposure can rise to Tk250 crore.

In a separate easing measure, Bangladesh Bank has also reduced the risk-weight calculation on non-funded credit instruments such as letters of credit (LCs) and guarantees. Until June 30, 2027, only 25% of the value of such instruments will be counted toward a bank’s single borrower exposure, down from 50%.

The change is expected to significantly boost trade finance activity, enabling banks to issue more import-export LCs without breaching exposure limits. Previously, a Tk100 crore LC would count as Tk50 crore of exposure; under the new rule, it will count as Tk25 crore.

Bankers say the move will provide immediate relief to large importers and exporters struggling to secure sufficient working capital amid volatile foreign exchange conditions and rising trade costs.

However, some industry insiders warned that the relaxed exposure limit could increase concentration risk in the banking sector, potentially amplifying the impact if large corporate borrowers default.

Bangladesh Bank had tightened single borrower exposure rules in 2022 to reduce excessive credit concentration among large conglomerates.