Bankers fear, BB hopeful

*     Outstanding loans stand at Tk18,24,668 crore
*     Total classified loans reach Tk5,88,704 crore at the end of March 2026

Bangladesh Bank’s ‘One-Time Exit’ facility may recover some long-stuck loans, but bankers fear the policy will face paradox in reducing large corporate bad loans because arranging the principal amount by December 31 may be difficult.

The concern comes against the backdrop of an unprecedented bad-loan problem. Bangladesh Bank (BB) data show classified loans reached Tk5,88,704 crore at the end of March 2026, up Tk31,487 crore from Tk5,57,217 crore three months earlier.

Classified loans accounted for 32.26 per cent of total outstanding loans of Tk18,24,668 crore.

Nearly 94 per cent of the classified loans were in the bad/loss category, meaning the pool potentially covered by the exit facility is very large.

While talking to The Daily Observer a serving senior private banker requesting anonymity said for a large borrower, the problem is often not the accumulated interest but the availability of hundreds or even thousands of crores of taka in cash.

“If a borrower can arrange the entire principal amount, then why cannot he run his business and repay the loan?”

Another serving banker questioned whether the policy could force a distressed businessman to sell productive assets. “Should a borrower sell his land just to arrange the money for the one-time exit?” he asked.

According to the One Time Exit (OTE) policy that the BB introduced through BRPD-1 Circular Letter No. 23, dated June 29, 2026, titled “Special Exit Policy for Recovery/Settlement of loans classified as bad/loss as of June 30, 2026 can be brought under the special exit facility. 

Loans in the bad/loss category that were rescheduled between August 6, 2024 and June 30, 2026 are also covered. The facility remains available until December 31, 2026.

The policy’s requirement for a single lump-sum settlement-meaning payment of the outstanding amount at one time rather than in installments-is emerging as a major hurdle for large borrowers.

For a small borrower, arranging the amount may still be possible by collecting receivables or selling a non-core asset. But for a large corporate borrower owing hundreds of crores, finding the entire principal at one time could be extremely difficult. Bankers fear some may even have to sell productive assets or land to make the payment.

If the bank’s board approves, applied and unapplied interest can be fully or partly waived. Importantly, the previous requirement that banks first recover their cost of funds before granting an interest waiver has been removed.

In simple terms, the policy can remove the interest burden, but it does not remove the principal obligation.

Another banker Md Abdul Mannan, head of credit, SBAC said, “Suppose a large borrower has an outstanding principal of Tk500 crore and accumulated interest of Tk200 crore. Without the exit facility, the claim could be Tk700 crore. If the bank waives the entire Tk200 crore interest, the borrower still needs Tk500 crore in cash to leave the default category.”

He said for a borrower with Tk1,000 crore principal and Tk400 crore accumulated interest, the waiver sounds enormous-but the borrower still has to produce Tk1,000 crore.

So, mathematically, the interest waiver is more useful to borrowers who already have access to the principal money than to borrowers whose businesses and assets are genuinely distressed.

Bankers believe the facility could work better for small borrowers. A small businessman may be able to sell inventory, collect receivables, bring in fresh family or business funds or sell a non-core asset to arrange the principal. 

But a large industrial group owing hundreds of crores cannot necessarily generate such liquidity within a few months without selling land, factories or other productive assets.

This creates another problem. If a factory sells its productive assets to repay the bank, the bank gets cash today but the business may lose the capacity to generate income and repay other liabilities tomorrow.

The policy therefore faces a paradox: the borrowers most capable of paying the principal may have the greatest ability to exit, while those most deeply distressed may be unable to use the facility.

The BB’s position, however, is that the facility should not be seen simply as an automatic interest-waiver programme.

The central bank spokesperson and Executive Director Arief Hossain Khan said borrowers should be assessed individually. If a borrower suffered a genuine financial crisis but still has the capacity to operate the business, has a satisfactory transaction history and shows willingness to repay, the bank can consider the interest waiver with board approval.

That approach could make the scheme more practical. A bank can examine the borrower’s cash flow, assets, business viability and repayment capacity and then negotiate the settlement within the framework allowed by BB Arief Khan said.

But bankers say the December 31 deadline makes the challenge severe. From the June 30 cut-off to December 31, borrowers have roughly six months to arrange potentially enormous sums.