DHAKA, June 30, 2026 (BSS)- Bangladesh Bank has introduced a special 'One-Time Exit' facility to reduce the rising volume of default loans in the country's banking sector, boost loan recovery and enhance banks' capacity to disburse new loans.

Under this facility, defaulted borrowers classified as substandard and doubtful can settle their loans through a one-time lump-sum payment, provided they meet the specified conditions, said a press release here on Monday from the Banking Regulation and Policy Department (BRPD-1) of Bangladesh Bank.

The release said that increasing the flow of credit to productive sectors is crucial for creating employment and achieving sustainable economic growth.

The current significant rise in default loans within the banking sector is negatively impacting banks' asset quality, liquidity management, and their capacity to disburse new loans. In this context, reducing default loans has become urgent.

Bangladesh Bank noted that this special exit facility has been introduced for borrowers who, despite facing financial difficulties for various reasons, have the capacity to run their businesses and demonstrate sincerity in repaying their loans.

As a result, on the one hand, the volume of default loans in banks will decrease; on the other, the capacity to disburse new loans will increase, which will play a positive role in production, investment, and employment generation.

Loans classified as substandard and doubtful as of the base date of June 30, 2026, may be brought under the special exit facility, subject to approval by the bank's board of directors and on the basis of banker-client relationships, added the release, said the release. 

To avail this facility, borrowers must repay the entire outstanding liability in a single payment. At the same time, some previous conditions set by Bangladesh Bank regarding the waiver of accrued and non-accrued interest have been relaxed.

Specifically, the conditions outlined in two circulars from 2022, which required the recovery of fund costs and prohibited disruption to the income streams of state-owned commercial banks, will not apply to this special facility.

Furthermore, loans re-scheduled between August 6, 2024, and June 30, 2026, that is classified as substandard or doubtful will also be eligible for this special exit facility.

Bangladesh Bank has instructed that, when granting the special exit facility, priority must be given to short-term agricultural loans in the agriculture sector and cottage, micro, and small loans under the CMSME sector.

The press release also said that banks must take all necessary measures, including sending letters, to inform borrowers about this special facility.

Bangladesh Bank said this directive will remain in effect until December 31, 2026. The instruction has been issued under the powers conferred by Sections 45 and 49(1) of the Bank-Companies Act, 1991.