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BB governor urges banks to revive closed factories

Published : Saturday, 14 November, 2026 at 8:07 PM

Observer Online Report

Bangladesh Bank Governor Md Mostakur Rahman has urged banks to take initiatives to bring closed factories back into economic activity, saying valuable industrial assets cannot be allowed to remain unused.

He said factories that cannot resume operations under their existing owners should be sold to new entrepreneurs, leased out or used for alternative economic activities.

The governor made the remarks at a session titled 'Macroeconomy, Investment and Economic Stability' at the fifth Bangladesh Economic Summit 2026, held at Pan Pacific Sonargaon Hotel in Dhaka on Saturday (November 14).

He said closed factories represented not only banks' stuck loans but also the interests of the country's people. Banks must share responsibility for reviving these industrial units and examine whether they properly monitored factory operations after disbursing loans.

Explaining the central bank's initiative, Mostakur Rahman said Bangladesh Bank had sought customer-wise information on closed factories from all banks last week.

Banks have been asked to consider four options: whether factories can operate under their existing owners, whether they can be sold to new entrepreneurs, whether they can be leased out, or whether alternative economic activities can be introduced on the premises.

The governor illustrated the issue by referring to a factory built on six bighas of land that had remained closed for three years, while investors were acquiring another six bighas to establish a new factory.

He said the country had limited land resources and urged investors to explore ways to utilise existing industrial premises rather than acquire additional land.

Even if all the machinery in a factory becomes unusable, economic activities should not come to a halt, he said, adding that alternative ventures could be introduced using the existing land and infrastructure.

Describing factory premises as national assets, he said they should not be left unutilised.

The governor also stressed banks' accountability for ensuring the proper use of deposited funds. He said banks were licensed to invest depositors' money and must monitor whether borrowers were using loans for their intended purposes.

If loan funds were diverted to other sectors or factories shut down after receiving financing, banks must explain what action they had taken, he added.

**Working capital shortages, weak purchasing power weigh on industries**

Identifying the key challenges facing large and medium-sized industries, Mostakur Rahman pointed to two major problems: shortages of working capital and declining purchasing power among consumers.

He said industrial production and sales depended on the availability of buyers and market demand. Without an improvement in people's purchasing power, factories would struggle to increase production and sales.

To address the situation, Bangladesh Bank is prioritising credit flows to agriculture and small and medium-sized enterprises (SMEs).

The governor said agricultural and SME financing had received priority since he took charge of the central bank, as these sectors offered greater opportunities for employment generation and income growth. Higher incomes would eventually boost consumer demand and support industrial growth, he added.

Addressing the slowdown in bank lending, the governor said high interest rates had reduced demand for loans. The central bank is considering further cuts to the policy rate to improve the situation.

He also called on banks to develop suitable loan products to expand financing in new and underserved sectors.

Citing the microfinance sector's loan disbursement of more than Tk 2.5 lakh crore and interest rates of around 24 per cent, he questioned why banks were unable to meet the financing needs of farmers and small entrepreneurs despite strong demand.

He said the absence of suitable loan products for these sectors was preventing banks from expanding credit flows.

Regarding Resident Foreign Currency Deposit (RFCD) accounts, the governor said Bangladesh Bank had simplified the rules after reviewing difficulties faced by students in sending tuition fees to educational institutions abroad.

However, certain restrictions had also been introduced to prevent misuse of these accounts, as a tendency had emerged among some people to purchase US dollars from the local market and deposit them into RFCD accounts.

Such practices could undermine discipline in the foreign exchange market, he said, adding that the central bank wanted foreign currency brought into the country in cash to enter the formal banking system.

The governor said Bangladesh Bank was strengthening its oversight of banking services to improve service quality.

Although banks' service standards are reviewed every month, director-level reviews will now be introduced due to shortcomings in achieving the prescribed targets.

He added that the central bank was also conducting weekly reviews to ensure that loans allocated to different sectors were being disbursed on time.

Bangladesh Bank has also been using social media and podcasts to inform entrepreneurs about available credit facilities.

Highlighting the substantial amount of money Bangladeshis spend on medical treatment abroad, Mostakur Rahman proposed involving private hospitals in healthcare delivery through public-private partnerships (PPPs).

Under the proposed arrangement, the government could purchase a specified number of surgical services from private hospitals, including open-heart surgery and other complex procedures.

He said agreements with private healthcare providers could encourage private-sector investment while expanding access to advanced medical treatment within the country.

Private hospitals could provide such services under government contracts in exchange for agreed payments, potentially bringing positive changes to the country's healthcare system, he added.

- MaT