Bangladesh Bank has once again introduced the 'Special Exit' facility to reduce the pressure of increasing defaulted loans in the country's banking sector and to increase the capacity of banks to distribute new loans.
Under this facility, defaulted borrowers will get the opportunity for special settlement including interest waiver if they repay the entire loan in one go by fulfilling certain conditions.
On Monday, Bangladesh Bank's Banking Regulations and Policy Department (BRPD-1) issued a circular in this regard.
The circular said that the significant increase in the amount of defaulted loans in the country's banking sector is negatively affecting the quality of assets, liquidity management and the ability to distribute new loans of the banks.
In this situation, a one-time special exit facility has been introduced for borrowers who have the ability to run their business and have the sincerity to repay the loans despite facing financial crisis.
According to the instructions of Bangladesh Bank, loans classified as bad and loss as on the base date of June 30, 2026 can be settled under the special exit facility based on the banker-customer relationship, subject to the approval of the bank's board of directors.
The new instructions state that to get the special exit facility, the borrower will have to repay the entire loan liability in one go.
In this case, the accrued and unaccrued interest can be waived. However, some conditions of the relevant circulars have been relaxed in this regard.
In addition, bad or loss-making loans rescheduled between August 6, 2024 and June 30, 2026 will also come under this special facility.
Bangladesh Bank has also instructed that in providing special exit facilities, priority should be given to short-term agricultural loans in the agricultural sector and cottage, micro and small loans in the CMSME sector.
The circular has asked banks to take all necessary steps, including sending letters to inform borrowers about this special facility, so that eligible customers can avail this opportunity.
Bangladesh Bank said that this special exit facility will be effective until December 31, 2026.
According to analysts, this initiative can bring some speed to the settlement of long-standing defaulted loans.
However, at the same time, they believe that it is important to ensure that the special exit facility does not discriminate against customers who repay their loans regularly and does not send the wrong message to future defaulters.