BB offers special exit facility to help banks recover bad loans

The Bangladesh Bank (BB) has introduced a special one-time exit facility for defaulted borrowers to help banks recover bad loans and strengthen the country's banking sector. 

The central bank announced the policy through a circular issued on Monday.

Under the new policy, banks can offer the special facility to borrowers whose loans were classified as substandard or bad/loss as of June 30, 2026. The facility will be available after approval from the bank's board of directors and based on the bank's relationship with the borrower.

The BB said the growing volume of non-performing loans has weakened banks' financial health and reduced their ability to provide fresh loans. By recovering these loans, banks will be able to lend more to businesses, support investment, create jobs and contribute to economic growth.

To receive the benefit, borrowers must make a one-time settlement of the agreed amount. The facility will also cover loans that were rescheduled between August 6, 2024 and June 30, 2026. Banks have been asked to give priority to short-term agricultural loans and CMSME loans while implementing the policy.