United News of Bangladesh

Bangladesh Bank has introduced a special one-time exit facility to help finance companies recover or adjust their classified bad and loss loans, as part of efforts to shore up asset quality and liquidity in the sector. The central bank's Finance Company Regulation and Policy Department (FCRPD) issued the directive on Thursday, addressed to managing directors and chief executive officers of all finance companies operating in the country. BB eases external borrowing rules for foreign-owned industries The circular noted that borrowers across businesses, industries and projects have faced difficulties due to various uncontrollable economic factors, with some enterprises shutting down or turning loss-making. This has disrupted loan recovery for finance companies, prompting the central bank to allow a one-time settlement route for willing borrowers whose chances of regularising loans through the normal process have weakened. Under the policy, finance companies may offer the special exit—subject to board approval to customers holding loans classified as bad or loss as of June 30, 2026, based on the institution's relationship with the borrower. Key conditions set out in the circular include: Borrowers opting for the facility must clear their entire outstanding liability in a single, one-time payment. According to the circular, the principal amount of the loan cannot be waived, though interest may be waived after verification and selective scrutiny. Where relaxation of fund utilisation conditions or income-sector deviation is required for an interest waiver, the justification must be confirmed through the finance company's internal audit function, with an opinion obtained from the Head of Internal Control and Compliance (HICC). Besides loans involving fund diversion, fraud, forgery or other irregularities in disbursement will not qualify for the exit facility. Loss-classified loans that were rescheduled between August 6, 2024 and June 30, 2026 will be eligible under this circular. Priority in granting the special exit will go to short-term agricultural loans and cottage, micro and small loans under the CMSME sector. Finance companies have been instructed to notify eligible borrowers in writing about the facility and take other necessary steps to implement it. The circular will remain in force until December 31, 2026, and has been issued under the powers vested in Bangladesh Bank by Section 41 of the Finance Company Act, 2023, effective immediately.

A meeting of the Board of Directors of Islami Bank Bangladesh PLC was held at the Islami Bank Tower in the capital on Wednesday. The meeting was presided over by Mohammad Zahir Hussain, executive director of Bangladesh Bank and the sole representative of the board of directors. Md Altaf Hossain, acting managing director, and Md Habibur Rahman, company secretary of the bank, also attended the session. BB eases external borrowing rules for foreign-owned industries Zahir Hussain has been temporarily overseeing the bank's board as its sole statutory representative under the central bank's authorisation to maintain the financial institution's operational stability and ensure uninterrupted services during the transition period.

Bangladesh Bank has handed the management of Al-Arafah Islami bank back to its former owners.  As per the central bank directive, 14 new entrepreneur-shareholders were inducted into the bank's board of directors on Wednesday (July 15). Bangladesh Bank Executive Director and Spokesperson Arif Hossain Khan confirmed the information to UNB. Since August 2024, the bank had been functioning under a five-member body of independent directors. With the inclusion of these 14 individuals, the total number of directors now stands at 19. During the Awami League regime, Abdus Samad Labu, brother of S. Alam served as the chairman of Al-Arafah Islami bank. The central bank spokesperson stated that among the 16 banks whose boards were previously dissolved by the BB, Al-Arafah Bank’s financial condition has shown improvement, prompting the reinstatement of its shareholder-directors. He noted that while the entrepreneurs of other dissolved banks could not be traced, the situation was different for Al-Arafah Bank, which is why it has been handed back to them. Among the 14 new board members, three are from the KDS Group. They are KDS Group Chairman Khalilur Rahman, KDS Garments representative director Mahbub Ahmed, and KDS Textile representative director Farid Uddin Ahmed. The other directors included in the board are the bank’s former chairman Bodiur Rahman, Enayet Ullah (who contested the last election from Dhaka-7 representing Jamaat), Selim Rahman, Ahamedul Haque, Rafiqul Islam, Imadur Rahman, Nazmul Ahsan Khaled, Anwar Hossain, Abdus Salam, Liakat Ali Chowdhury, and Sharif Uddin Taslim, representing KY Steel Mills. Following the fall of the Awami League regime, the central bank dissolved the board of Al-Arafah Islami Bank and appointed Khaja Shahriar as an independent director and chairman of the board. The other independent directors on the board—Md. Shahin Ul Islam, Md. Abdul Wadud, M. Abu Yusuf, and Mohammad Ashraful Hasan—will also remain on the new board. Moving forward, all members of the newly formed board will collectively appoint a new chairman.

Bangladesh Bank has granted general permission for fully foreign-owned industrial enterprises, operating both within and outside specialised economic zones, to borrow directly from their parent companies, associates, or shareholders abroad, in a move aimed at easing access to finance for foreign investors. The central bank's Foreign Exchange Investment Department (FEID) issued the directive through FEID Circular on Wednesday revising earlier provisions under FE Circular No. 34 of September 2, 2025, which governed external borrowing by such enterprises. Under the new provisions, foreign-owned manufacturing and service enterprises outside specialised zones such as EPZs, PEPZs, EZs and HTPs can now avail short-term borrowing of less than one year without prior Bangladesh Bank approval, provided the funds are used for genuine business purposes. The circular allows two options for such borrowing-enterprises may take interest-free loans for general working capital needs, excluding input procurement, with no central bank clearance required even for principal repayment. Alternatively, they may opt for cost-bearing loans in convertible foreign currencies, including for input procurement, but the all-in cost of such borrowing must not exceed 3 percent per annum. These loans must be repaid in a single bullet payment at maturity and may be rolled over, provided the total tenor, including rollovers, does not exceed three years from the date of initial drawdown. Such short-term facilities cannot be converted into medium or long-term loans. Authorized Dealers (ADs) have been directed to report all such transactions to the FEID within one week of execution, in addition to routine reporting requirements.

Bangladesh Bank has made prior approval from the Chief Inspector of Boilers mandatory for the import of boilers and boiler components, in line with a directive from the Ministry of Industries. The central bank's Foreign Exchange Policy Department issued a notification on Tuesday, instructing authorised dealer (AD) branches of all banks engaged in foreign exchange transactions to comply with the new requirement. The notification said the fresh directive follows a memo issued by the Boiler Wing of the Ministry of Industries on June 28, 2026, and has been made effective for all boiler and boiler component imports accordingly. According to the notification, boiler manufacturers must complete construction within a maximum of 12 months from the date of drawing and design approval. Manufacturers must also hand over all documents and certificates required for registration to the buying entity after supply or sale of a boiler, and must inform the Chief Inspector of Boilers in writing of the buyer's name and address. The directive further requires that occupational health and safety of factory workers be ensured, with all relevant provisions of existing labour law to be followed. Under the new instructions, prior approval from the Chief Inspector of Boilers must be obtained through a prescribed application form before any import of boilers or boiler components. On receipt of an application, a designated officer will verify the necessary documents and submit a report to the Chief Inspector, who will grant or reject the import approval after reviewing the report. If approved, the Deputy Chief Inspector of Boilers will issue the approval letter. If an application is rejected, the applicant must be informed in writing of the reasons within seven working days, after which they may reapply upon rectifying the deficiencies and paying the requisite fee. The notification added that the concerned authority may also inspect a manufacturer's factory or production process, if required, to ensure the quality of boilers.

Bangladesh Bank (BB) has exempted Shinepukur Ceramics Limited from a specific restrictive provision allowing the company to open Letters of Credit (LC) with a 100 percent margin through Sonali Bank PLC to import essential raw materials. The central bank issued an official directive on Tuesday (July 14), signed by Deputy Governor Dr. Md. Kabir Ahmed and circulated by Director Md. Bayazid Sarker of the Banking Regulation and Policy Department-2, notifying the top executives of all scheduled banks across the country. Bangladesh Bank declared that the restrictions under Section 27 Ka(3) of the same act will remain suspended for Shinepukur Ceramics Limited until December 31, 2027. The central bank noted that the special regulatory waiver has been granted strictly on humanitarian and economic grounds to ensure the continuity of the factory’s industrial production and to protect the employment of its massive workforce. However, the apex bank attached strict conditions to safeguard the state-owned lender's funds: Designated Account Tracking: Shinepukur Ceramics Limited must deposit all its operational and business income into a single, specific designated bank account. Proportionate Debt Clearance: Sonali Bank PLC must regularly recover its outstanding dues from that specific account on a proportionate basis. Zero State Liability: The central bank explicitly clarified that no financial liability or obligation will be passed on to the Finance Division or Bangladesh Bank against this special credit facility. No Future Bailouts: The directive strongly stated that Sonali Bank PLC, the Government, or any involved entity cannot claim any financial assistance or bailouts from Bangladesh Bank regarding this arrangement in the future.

Finance Minister Amir Khosru Mahmud Chowdhury on Sunday informed Parliament that the total amount of default loans in nine state-owned banks stood at Tk 188,701.75 crore as of May 31 this year. Replying to a question from reserved seat Jamaat-e-Islami MP Sabikun Nahar during the question-answer session, the minister said the figure was based on data submitted by the banks to the Credit Information Bureau (CIB) database of Bangladesh Bank. The minister said the nine state-owned banks are Agrani Bank, Janata Bank, Rupali Bank, Sonali Bank, BASIC Bank, Bangladesh Development Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and Probashi Kallyan Bank. He said reducing the high level of default loans is essential to restoring discipline in the country's banking sector. Responding to a question from Jamaat MP Golam Rasul, the finance minister said the government's total outstanding debt stood at Tk 2,206,462 crore as of December 31. Of the total, external debt amounted to Tk 959,311 crore, while domestic debt stood at Tk 1,247,151 crore. Answering another question from Jamaat MP Shahjahan Chowdhury, Amir Khosru said the government repaid foreign loans worth US$4.65 billion during the 2025-26 fiscal year. Of the total, US$3 billion was repaid as principal and US$1.65 billion as interest. In reply to a question from Jamaat MP Mahbubul Alam, the minister said Bangladesh Bank has taken several initiatives to provide easier access to loans for young entrepreneurs. He said the central bank has increased the refinancing fund for new entrepreneurs in the cottage, micro and small enterprise sector from Tk 100 crore to Tk 500 crore. Under the scheme, new entrepreneurs can obtain collateral-free loans of up to Tk 10 lakh at a maximum interest rate of 7 percent, while loans of up to Tk 35 lakh are available against collateral. Replying to a question from reserved seat MP Nilufar Chowdhury Moni, the minister said outstanding customs duties and taxes on imported goods collected by various customs houses under the National Board of Revenue over the past five years amounted to Tk 25,504.3 crore. He added that out of Tk 3,912 crore payable by Bangladesh Petroleum Corporation, Chattogram Custom House had recovered Tk 590 crore by June this year. Responding to a question from Dhaka-18 MP SM Jahangir Hossain, the finance minister said the government had decided to waive agricultural loans of up to Tk 10,000, including interest, for farmers across the country covering crops, livestock, fisheries and other agricultural activities. Under the programme, banks had received Tk 1,352.74 crore from the government by July 2 to settle dues for 1,434,482 farmers, he said. In reply to Nilphamari-4 MP Abdul Muntakim, the minister said Bangladesh Bank's regulations stipulate that a bank's fixed assets cannot exceed 30 percent of its paid-up capital. As Sonali Bank's fixed assets are already significantly higher than the prescribed limit, the bank is currently unable to purchase additional fixed assets or construct new buildings, he added. Answering a question from Cumilla-9 MP Abul Kalam, the finance minister said discussions between the Economic Relations Division and the World Bank are underway to prepare the financing pipeline for the 2026-27 fiscal year. He said budget support remains one of the World Bank's financing instruments for Bangladesh, and the government's requirement and target for such support in FY2026-27 will be determined following consultations with the relevant stakeholders. The government will decide the sectors in which any budget support funds will be utilised based on national priorities.

In a major move to curb irregularities in foreign exchange operations and stamp out illicit financial flows, Bangladesh Bank (BB) has launched a comprehensive special inspection targeting some commercial banks, central bank sources revealed. The central bank has formed six separate inspection teams to intensely scrutinize the treasury and information technology (IT) divisions of the selected commercial institutions. The banks currently under oversight are state-owned Sonali Bank, Janata Bank, and Agrani Bank, alongside private sector lenders BRAC Bank, Prime Bank, and HSBC Bangladesh. The regulatory intervention follows recent allegations of foreign payment discrepancies at a state-owned commercial bank. Central bank investigators discovered instances where foreign currency payments were dispatched to clients through overseas "Nostra accounts," but the corresponding domestic liabilities or loans were suspiciously omitted from the banks' internal ledger records. To ascertain the depth of this systemic vulnerability, Bangladesh Bank is auditing Nostra account balances, transactional deposits, foreign outbound transmissions, and swift settlements. Investigators are cross-checking all suspicious high-value international transactions to see if standard protocols were bypassed to harbor covert loan facilities. Moving forward, Bangladesh Bank has affirmed that it will aggressively continue unexpected, sudden visits to the Nostra accounts and monitor the foreign currency transmission frameworks of commercial banks. The central bank views these unannounced, real-time interventions as critical to tightening corporate governance and detecting trade-based money laundering or capital flight before the funds disappear into foreign jurisdictions. Commenting on the development, a senior executive from a private bank under inspection noted that while the central bank possesses full authority to conduct sudden audits at any given time, the lack of immediate loan creation following a Nostra account payout is highly irregular under standard operating practices, warranting a deeper and strict administrative probe.

Abdur Rahman Khan, immediate past chairman of the National Revenue Board (NBR), is likely to become the next alternate executive director representing Bangladesh at the World Bank headquarters in Washington, DC. The official process is currently underway, and the official gazette notification is likely to be issued soon, according to an official of the Ministry of Finance. Abdur Rahman will succeed Sharifa Khan, the former senior secretary of the Economic Relations Division (ERD), who is currently serving in the position. Sharifa Khan was appointed to the post for a three-year term in March 2024. A highly accomplished civil servant, Abdur Rahman recently concluded his tenure as the head of the country's revenue administration. Known for his extensive experience in financial administration, public policy, and macroeconomic management, his transition to the global financial institution is seen as a strategic move to strengthen Bangladesh's representation and partnership with international lending bodies. As the alternate executive director, he will work out of the World Bank's main headquarters, looking after the interests of the constituency that includes Bangladesh. The position is vital for steering multilateral development funds, policy dialogues, and structural assistance programs tailored to Bangladesh's macroeconomic goals.

Modernizing trade finance operations and improving asset quality are essential to ensuring sustainable banking in Bangladesh, experts said at a workshop held at Bangladesh Institute of Bank Management (BIBM) on Wednesday. According to the BIBM study, the NPL rate specifically related to trade finance in troubled banks currently hovers between 40 and 50 percent. More alarmingly, in banks that already suffer from high overall NPLs alongside substantial trade exposure, the trade-specific default loan rate exceeds 80 percent. Islami Bank customer forum announces fresh protests demanding restoration of previous ownership Senior bankers, policymakers, regulatory officials, and researchers noted that trade finance portfolios face visible asset-quality pressures, with specific segments experiencing alarmingly high non-performing loans (NPLs). The observations were made during a review workshop titled "Trade Services Operations of Banks" organized by the BIBM at its campus in Mirpur, Dhaka. Presenting the keynote paper on behalf of the research team, Dr. Shah Md. Ahsan Habib, Professor (Selection Grade) at BIBM, revealed that the pressure on asset quality in trade-related loan portfolios is now starkly visible, particularly among banks with significant trade exposures. The study highlighted that the forced conversion of non-funded liabilities into funded loans is a primary driver behind this spike in trade defaults. This trend is most prominent in import finances involving capital machinery, raw materials like cotton, essential commodities such as sugar and fertilizer, fuel, and scrap vessel imports. The research paper also identified critical structural vulnerabilities in export financing. A survey conducted among industry professionals showed an overwhelming consensus among bankers that the misuse of back-to-back Letters of Credit (LCs) without legally enforceable sales contracts is directly fueling default loans in export finance. "Back-to-back LCs are meant to secure raw materials against confirmed export orders," the study noted. "However, if the underlying contract is weak, disputed, or legally unenforceable, the entire financing process falls into jeopardy. When export proceeds are delayed or unrealized, the self-liquidating nature of trade finance breaks down, turning these exposures into forced loans and multi-folding the credit risk for banks." Presiding over the workshop, BIBM Director General Dr. Md. Ezazul Islam stressed the urgent need to establish a modern legal and digital infrastructure for electronic trade documents to facilitate faster, secure, and paperless international trade. He also called for more stringent measures to combat trade-based money laundering (TBML) and terrorism financing without compromising the quality of customer service. "We need to expand trade finance opportunities for small and medium enterprises (SMEs) through innovative financial products and risk-sharing mechanisms," Dr. Islam said. He further emphasized the need to strengthen product-specific data collection, risk management, and rigorous asset-quality monitoring through closer coordination among Bangladesh Bank, scheduled banks, customs authorities, and all relevant stakeholders. The comprehensive research paper was jointly prepared by a team comprising BIBM faculty members Dr. Shah Md. Ahsan Habib, Tofayel Ahmed, Rahat Banu, and Rajib Kumar Das, alongside Mohammad Arafat Ali, Additional Director of the Foreign Exchange Policy Department-1 at Bangladesh Bank, and ATM Nesarul Hoque, Executive Vice President of Mutual Trust Bank PLC. The workshop also featured expert discussions from Md. Ali Hossain Pradhania, Supernumerary Professor at BIBM and Chairman of NRBC Bank PLC; Mahmudur Rahman, Deputy Managing Director of Islamic Bank Bangladesh PLC; Syed Sajjad Haider Chowdhury, Deputy Managing Director of Prime Bank PLC; and Faruk Ahmed, Deputy Managing Director of City Bank PLC.