BB eases business, investment rules ahead of national polls

 
In a sweeping initiative viewed as a significant stimulus for industry and investment ahead of the national election period, Bangladesh Bank has unveiled a series of regulatory relaxations aimed at facilitating import financing, restructuring defaulted loans, and cleansing bank balance sheets. The measures—which cover capital goods imports, partial loan write-offs, relaxed rescheduling rules, and exit facilities—are expected to ease operational bottlenecks for businesses, unlock investment flows, and provide relief to both distressed borrowers and commercial banks grappling with record levels of non-performing loans (NPLs).

In a circular issued on Wednesday, the central bank permitted industrial importers to bring in capital goods under usance terms of up to three years without prior approval from the Bangladesh Investment Development Authority (BIDA).

Previously, such a tenure was limited to capital machinery imports. The new directive broadens the scope to include other capital goods, including ships and industrial equipment. Business leaders said the move would enable manufacturers to plan capacity expansion more efficiently, particularly in sectors such as shipbuilding, steel, energy, and export-oriented manufacturing. The circular cites a resolution passed during the 186th meeting of BIDA’s Foreign Loan Scrutiny Committee, chaired by the central bank governor. Arguably the most consequential reform came last Thursday, when Bangladesh Bank introduced partial write-offs of bad loans for the first time in the country’s history. Until now, banks were compelled to retain non-recoverable loans on their books if any collateral remained, artificially inflating balance sheets. Under the new guidelines, banks may write off only the unsecured and uncollectible portion of a loan after accrued interest is removed.

Collateral-backed value must remain on the balance sheet and be recovered. Banks are also required to separately record uncharged interest and ensure that borrower payments are first applied against the written-off amounts.

The central bank noted that the policy aligns Bangladesh with global standards under Basel and IFRS and is expected to enhance transparency in capital adequacy and asset quality reporting. The move comes amid a historic surge in bad loans, which climbed to Tk6.44 lakh crore—nearly 36% of all disbursed loans—by September 2025. In another reform aimed at easing business stress during political and economic transitions, Bangladesh Bank has extended the deadline for distressed borrowers to reschedule loans with a minimal 2% down payment, moving the cut-off to 30 November.

The regulator has also revamped the exit facility. Previously, a borrower’s loan remained classified throughout the exit period. Under the new framework, once the facility is approved, the borrower’s classification is upgraded immediately, removing them from the defaulters’ list and restoring access to non-funded facilities, including letters of credit (LCs). Quarterly repayment discipline has been made mandatory.

Additionally, a special rescheduling scheme has been introduced for borrowers impacted by policy discrimination, political disruption, utility failures, exchange rate volatility, and global supply chain risks. Loans can now be rescheduled for up to 10 years, with a two-year grace period. Large loans exceeding Tk300 crore will require inter-bank review meetings. As policy relief expands, more than 300 companies—including some of the nation’s largest corporate borrowers—have already applied to restructure Tk2 lakh crore in loans. Bankers caution that while the measures may revive investment and employment, they could also entrench a culture of non-payment if misused. With elections approaching and investment stagnant, many economists view the measures as a last-minute effort to stabilize industry confidence. “This is both cleaning the banking balance sheet and boosting investment sentiment,” said a senior banker. “But its success will depend on rigorous monitoring to distinguish genuine borrowers from habitual defaulters.”