After banks, BB offers one-time exit to NBFI borrowers

The Bangladesh Bank has extended a one-time loan settlement facility to borrowers of non-bank financial institutions (NBFIs) whose businesses have become distressed due to “circumstances beyond their control,” following a similar scheme for bank borrowers.

The policy will remain effective until December 31, 2026, the regulator said in a circular issued yesterday.

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In a separate circular issued on the same day, BB has also extended a special restructuring and rescheduling facility to borrowers of distressed NBFIs, aiming to revive struggling businesses, improve loan recovery, and strengthen the sector’s liquidity.

As of last September, the country’s 35 NBFIs -- most of them in financial trouble, with five under liquidation -- held Tk 29,408.66 crore in bad loans, or 37.11 percent of their total disbursed loans of Tk 79,251.11 crore, according to BB data.

BB said borrowers may face repayment difficulties due to factors including adverse economic conditions, the closure of industrial or business establishments, or company liquidation.

In such cases, it added, recovering loans through legal procedures often becomes difficult and time-consuming, making a special settlement framework necessary.

Under the one-time settlement policy, classified loans as of June 30, 2026, can be brought under the special exit facility, subject to approval by the NBFI’s board of directors, states the BB circular.

To qualify for the facility, borrowers must repay all overdue loans in a lump sum. The principal amount cannot be waived, although NBFIs may waive penal or additional interest if justified, backed by an internal audit and endorsed by the institution’s Internal Control and Compliance (ICC) unit.

The circular also stipulates that borrowers involved in fund diversion, fraudulent loan disbursement, forgery, or other financial irregularities will not be eligible for the facility.

Loans classified as bad or loss and fully provisioned between August 6, 2024, and June 30, 2026, will also qualify for the special settlement scheme.

In addition, NBFIs have been instructed to give priority to loans in agriculture, cottage, micro, small and medium enterprises (CMSMEs), and women’s entrepreneurship while implementing the policy.

The central bank asked all financial institutions to take the necessary steps to properly assess borrowers before extending the facility. The directive was issued under Section 41 of the Financial Institutions Act, 2023, and takes immediate effect.

Special restructuring facility

The restructuring policy expands earlier support measures announced for banks in September and November 2025 and May 2026.

Under the support measures, loans that remained unclassified until June 30, 2026, will qualify for special restructuring. Those classified as substandard, doubtful, or bad or loss up to March 31, 2026, will qualify for special rescheduling.

Finance companies may approve restructuring or rescheduling after complying with the Financial Institutions Act, 2023, and relevant BB regulations. All applications, approvals, and related formalities must be completed by September 30, 2026.

BB expects the measure to improve the liquidity position of finance companies, many of which have been grappling with mounting defaults and severe cash shortages.