Published: 12:21 AM, 01 July 2026
High-concession exit policy unveiled to tackle banking crisis
In an urgent move to address the escalating volume of non-performing loans (NPLs) and restore liquidity to the financial sector, Bangladesh Bank has introduced a highly concessionary 'special exit policy.'
The directive allows commercial banks to waive applied and unapplied interest-including income already credited to a bank's income accounts for borrowers who agree to settle their entire outstanding liability in a single installment.
CORE COMPONENTS OF THE POLICY:
Scope & Timeline: Valid until December 31, 2026, the policy applies to loans classified as 'bad and loss' as of June 30, 2026, including facilities rescheduled after August 5, 2024.
Unprecedented Waivers: Banks are permitted to waive interest even below their actual cost of fund management. State owned and specialized banks are temporarily exempted from restrictions prohibiting interest waivers via income account debits.
Sector Priority: Financial institutions must actively reach out to borrowers, with structural priority given to short-term agricultural loans and the CMSME sector. All settlements require Board of Directors approval based on the banker-customer relationship.
FISCAL AND PROFITABILITY IMPACT:
While designed to quickly recover stuck capital, the policy poses immediate challenges for bank profitability and public finance. Because interest on regular credit drives operating profits, reversing previously recognized income will shrink bank earnings. Consequently, this will reduce corporate tax collections from the banking sector, where listed banks pay 37.5% and non-listed banks pay 40% in tax.
THE SCALE OF THE FINANCIAL CRISIS:
The intervention follows a severe deterioration in systemic banking indicators. By the end of the last fiscal cycle, total distressed assets reached Tk 10,87,590 crore, accounting for 59.73% of the country's total Tk 18,20,915 crore outstanding credit.
Classified Defaulted Loans: Tk 5,57,217 Crore; Uncollected Rescheduled Balance: Tk 4,46,894 Crore; Written-off Outstanding Balance: Tk 83,479 Crore.
BACKGROUND CONTEXT:
Financial analysts note that a vast portion of these distressed loans accumulated under the previous Awami League administration but were artificially masked as regular through superficial paper rescheduling. Following the political transition in August 2024, the interim government began exposing the true depth of the asset quality crisis. With several influential, non-compliant business tycoons now either at large or detained, the central bank's policy serves as a pragmatic, single-installment recovery window to stabilize the macroeconomic framework.
>>Ashik Munir, AA
