Bangladesh Bank has issued a circular allowing institutions or groups with outstanding loans of Tk1,000 crore or more to regularise defaulted loans through a 2% down payment. The banking regulator’s Banking Regulation and Policy Department-1 issued the directive on Monday, extending the maximum rescheduling period to 15 years from 10 years and allowing an initial two-year grace period for instalment payments.

Applications for special policy support for affected borrowers and financial-system restructuring can be submitted to relevant banks until September 30. Only loans that become defaulted by September 30 will qualify, and banks must settle all applications by December 30. For special restructuring, banks may add up to four years beyond the existing prescribed term.

Borrowers previously granted special policy support will also be eligible, with time already used as a grace period counted within the new grace period. Bangladesh Bank cited Middle East war conditions, energy shortages, higher interest costs under market-based rates, and pressure on export-oriented industries. It said the support aligns with an 18-month roadmap to reduce defaulted loans, with policy assistance offered through December 31.