Written by The Banking Post
Bangladesh Bank has launched a Tk20,000 crore special financing scheme to revive closed and partially closed industrial enterprises in an effort to support employment and production. Under the facility, large industrial and service sector firms suffering from working capital shortages will be eligible for loans of up to Tk200 crore at a maximum interest rate of 7 per cent.
However, the initiative comes at a time when the country’s banking sector continues to grapple with a massive burden of non-performing loans despite repeated policy support measures. Sector insiders warn that the programme could create fresh risks for banks even as it seeks to stimulate economic activity.
Under BRPD Circular No. 13 issued on Thursday, Bangladesh Bank established the three-year revolving fund titled the “Closed Industry and Service Sector Support Pre-Finance Scheme.” The fund will be financed from the excess liquidity held by scheduled banks.
According to the central bank’s latest estimates, excess liquidity in the banking sector stands at around Tk3.78 lakh crore, of which approximately Tk27,000 crore is immediately deployable.
Bangladesh Bank said many industrial and service sector enterprises across the country are either fully or partially closed, while others are operating below capacity because of insufficient working capital. The central bank believes that restoring financing to these firms could increase production, create jobs and boost export earnings.
Export-oriented and indirect export enterprises will receive priority under the scheme.
The initiative comes at a time when credit growth has virtually stalled despite ample liquidity in the banking system. Private sector credit growth fell to just 4.72 per cent at the end of March 2026, one of the lowest levels recorded in more than two decades. At the same time, classified loans in the banking sector reached Tk5.89 lakh crore, equivalent to 32.26 per cent of total outstanding loans.
The situation has created an unusual paradox. Banks have money to lend, but high levels of non-performing loans, provisioning shortfalls and growing risk aversion have limited the flow of credit to productive sectors. Meanwhile, parts of the industrial sector have reduced production or shut down altogether because of working capital shortages. The new scheme is intended to break that deadlock.
Who can apply and how
The facility will be available to large industrial and service sector enterprises as defined under the National Industrial Policy. Fully or partially closed businesses, as well as firms unable to operate at full capacity due to working capital constraints, will be eligible for consideration. Priority will also be given to technically capable enterprises seeking to acquire or lease closed industrial units and bring them back into operation.
However, borrowers classified as defaulters in the Credit Information Bureau (CIB), entities involved in money laundering or misuse of loan funds, and firms already receiving Bangladesh Bank refinancing support for the same purpose will not qualify for the facility. Eligible businesses will not apply directly to Bangladesh Bank. Instead, they must approach their existing banks for working capital financing.
Participating banks will be required to conduct a detailed assessment of each applicant, including production capacity, reasons for closure, working capital requirements, business recovery prospects and repayment capacity. Banks may appoint external specialists to assist in the evaluation process if necessary.
A single enterprise or business group will be eligible for financing of up to Tk200 crore. Each loan will carry a maximum tenure of one year, although renewals may be granted subject to satisfactory business performance.
The funds may be used for employee salaries and allowances, raw material purchases, utility payments, export order execution and other production-related expenses. The proceeds cannot be used to repay or adjust existing loans. Under the scheme, Bangladesh Bank will provide funds to participating banks at an interest rate of 4 per cent. Banks will be allowed to lend to borrowers at a maximum rate of 7 per cent, with a six-month grace period.
Given that industrial lending rates currently range between 13 and 16 per cent, the facility effectively provides a substantial interest subsidy to eligible firms. While the employment objective of the scheme is clear, concerns remain about its potential risks. The circular does not establish any minimum financial health criteria for participating banks. It also allows, under certain conditions, some enterprises with previously written-off loans to access fresh financing. As a result, questions have emerged over whether the programme could eventually contribute to a new build-up of non-performing loans.
Bangladesh Bank has nevertheless incorporated several safeguards. Workers’ salaries must be paid directly into NID-verified bank or mobile financial service accounts, with no cash transactions permitted. Beneficiary firms will be required to submit regular sales and revenue reports. Participating banks must conduct quarterly factory inspections, while Bangladesh Bank will retain the authority to carry out on-site verifications at any time.
Ultimately, the success of the scheme will depend not only on how much money is disbursed, but also on who receives the financing, how effectively the funds are used and how rigorously the central bank enforces oversight. Industry observers believe the programme has the potential to revive idle factories, support employment and increase production. But they also caution that weak implementation could turn the initiative into a new source of risk for an already fragile banking sector
