Bangladesh Bank Offers 7% Interest Loans to Restart Closed Factories

Bangladesh Bank has launched a Tk 20,000 crore special refinancing fund to help revive closed and partially operational industrial and service-sector enterprises across the country. Under the scheme, eligible businesses can access loans at a maximum interest rate of 7 percent, with a borrowing limit of Tk 200 crore for any single company or business group.

The central bank announced the initiative through a policy titled "Closed Industrial and Service Sector Supportive Pre-financing Scheme" issued on Thursday night (June 4).

The new fund is part of a broader Tk 60,000 crore economic recovery package announced on May 23 by Bangladesh Bank Governor Ahsan H. Mansur to stimulate economic activity and increase employment opportunities.

Key Features of the Fund

Under the scheme, commercial banks will be able to borrow funds from Bangladesh Bank at 4 percent interest and lend to eligible businesses at a maximum rate of 7 percent.

A company or group can receive loans of up to Tk 200 crore. The loan tenure will be up to one year, with renewal options subject to necessity and compliance. Borrowers will also receive a six-month grace period before interest payments begin.

Eligible Businesses

The facility is designed for:

• Large industrial and service-sector enterprises that are fully or partially closed but capable of resuming operations with additional working capital.
• Operational businesses that cannot run at full capacity because of capital shortages.
• Export-oriented and potential export-focused enterprises.
• Qualified investors seeking to restart closed factories through acquisition or lease arrangements.

However, businesses involved in loan defaults, money laundering, or misuse of previous loan funds will not be eligible.

Permitted Use of Funds

Loan proceeds can be used for:

• Worker and employee salaries and allowances for up to four months.
• Utility expenses, including electricity and gas bills.
• Purchase of raw materials required for production.

Worker wages must be paid through bank accounts or mobile financial services. Cash disbursements will not be allowed.

The funds cannot be used to repay, adjust, or settle existing loans.

Monitoring and Compliance

Participating banks will be required to monitor fund utilization regularly. Factory inspections must be conducted every three months, and reports submitted accordingly. Bangladesh Bank may also carry out inspections at any time.

If a bank fails to recover loans on time, Bangladesh Bank may deduct the amount from the concerned bank's account and impose an additional 2 percent penalty interest.

Expected Impact

According to Bangladesh Bank, the scheme aims to restart idle industrial capacity, increase production, boost exports, and create employment opportunities. Businesses that effectively use the funds and contribute to the national economy may also receive state recognition under the program.