Bangladesh Bank has eased the single borrower loan limit, allowing banks to lend up to 25 percent of their capital as funded loans to a single client, up from the previous 15 percent. However, the combined funded and non-funded exposure cannot exceed 25 percent. The new directive, issued on Thursday, will remain effective until June 30, 2028. The central bank stated that the decision aims to accelerate business activities and facilitate international trade financing.

Under the revised rules, non-funded loans converted into funded loans will now be calculated at 25 percent instead of 50 percent, effective until June 30, 2027. This rate will gradually increase to 30 percent by December 2027, 40 percent by December 2028, and return to 50 percent from January 2030. The circular also revises large loan exposure limits based on non-performing loan ratios, allowing higher lending flexibility for banks with elevated default rates.

Officials explained that the adjustment was necessary as the sector’s non-performing loan ratio has risen to 30 percent, compared to 9 percent when the earlier circular was issued, restricting new lending under the old limits.