B Mirror Report: Bangladesh Bank (BB) has introduced a special ‘One-Time Exit’ facility aimed at reducing the growing volume of default loans, improving loan recovery and strengthening banks’ capacity to extend fresh credit to productive sectors.

According to a circular issued by the Banking Regulation and Policy Department (BRPD-1), borrowers with loans classified as substandard and doubtful as of June 30, 2026, will be eligible to settle their outstanding liabilities through a one-time lump-sum payment, subject to specified conditions and approval by the respective bank’s board of directors.

The central bank said the initiative is intended to address the sharp rise in non-performing loans, which has weakened banks’ asset quality, strained liquidity management and reduced their ability to finance new investments.

The facility targets borrowers who have encountered financial difficulties but remain capable of operating their businesses and are willing to repay their debts.

Bangladesh Bank expects the measure to help reduce the stock of default loans while enabling banks to increase lending, thereby supporting production, investment and employment generation.

To qualify, borrowers must repay their entire outstanding liability in a single payment. The central bank has also relaxed certain earlier conditions governing the waiver of accrued and unaccrued interest. Restrictions contained in two circulars issued in 2022 requiring recovery of fund costs and protecting the income streams of state-owned commercial banks will not apply under this special arrangement.

The facility will also cover loans that were rescheduled between August 6, 2024, and June 30, 2026, provided they are currently classified as substandard or doubtful.

Bangladesh Bank has instructed banks to give priority to short-term agricultural loans and cottage, micro and small enterprise (CMSME) loans when implementing the scheme. Banks have also been directed to actively inform eligible borrowers about the opportunity through appropriate communication, including written notices.

The directive will remain effective until December 31, 2026, and has been issued under Sections 45 and 49(1) of the Bank Companies Act, 1991.