Loan rescheduling delays hit businesses hard
The delayed rescheduling of bad loans for companies, which defaulted due to circumstances beyond their control, has left many without capital, sending them to the brink of collapse.
Although Bangladesh Bank no longer directly approves or rejects rescheduling applications, leaving that responsibility to individual banks, it launched a special initiative earlier this year to support large borrowers affected by external shocks.
On January 30, the central bank formed a five-member committee to review restructuring proposals for defaulted loans exceeding Tk 50 crore.
The committee was tasked with identifying whether borrowers had been genuinely impacted by events such as the Covid-19 pandemic, the Russia-Ukraine war, or domestic economic and political crises, and whether loan restructuring could help revive their businesses.Bangladesh travel packages
So far, around 1,253 firms — mostly from export-dependent sectors like textiles, garments, and leather — have applied for relief under the scheme.
But as of now, only 115 companies have received any form of support, such as rescheduling, reduced down payments, or interest waivers.
Businesses said that the slow pace of processing these applications has pushed many firms into severe financial distress.
With no clear timeline or decisions, many companies remain in limbo, unable to operate or plan ahead.
As a result, they continue to incur losses, and several have already shut down as they can no longer afford to operate under mounting financial pressure.
Therefore, a significant number of workers were at the risk of losing jobs.
Business leaders have urged the central bank to treat the issue with urgency, warning that the already fragile business environment in the country is deteriorating further each day.
Shehab Udduza Chowdhury, vice president of the Bangladesh Garment Manufacturers and Exporters Association, told New Age that some businesses are struggling due to the slow pace of loan rescheduling.
He said the backlog is largely due to a single committee handling all applications.
He noted that in each meeting, the committee can resolve only three to four cases because multiple banks are often involved in a single loan, making coordination and consensus difficult.
At this rate, he warned, it could take up to five years to address all pending cases.
BGMEA met with Bangladesh Bank on July 10, urging the formation of additional committees and inclusion of stakeholders to accelerate the process.
Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), echoed the concern, noting that many companies have complained about inadequate support from the central bank.
He warned that the prolonged process may force some businesses to shut down operations.
Selim emphasised that companies affected by circumstances beyond their control deserve timely relief, and the central bank must treat the issue with urgency to prevent further losses and protect business continuity.
The loan rescheduling facilities were largely granted on political grounds, BB officials said, adding that many businesses linked to the Bangladesh Nationalist Party and other major opposition parties during the authoritarian Awami League regime, had faced hardship and business losses.
Businesses have expressed frustration over the delays, saying that factory conditions are deteriorating as cash flow declined.
They also said that the economic and political crises had disproportionately harmed genuine borrowers, who deserve priority over those exploiting rescheduling for political or personal gain.
The lack of cash flow is leading to production halts, staff layoffs and growing arrears to suppliers, further weakening the economies’ productive base.
Bangladesh Bank spokesperson Areif Hossain Khan, an executive director of the central bank, told New Age that the committee was launched to revive genuinely affected businesses whose default status resulted from factors beyond their control.
He pointed to the overwhelming volume of applications and the complexity of the screening process, citing the need to evaluate each applicant’s financial behaviour, sectoral viability and borrowing history.
However, he assured that the process has been expedited and that solutions for deserving companies will be delivered soon.
