Shipbuilding industry defaulters to get special rescheduling facility

Bangladesh Bank (BB) has allowed a special loan rescheduling and restructuring facility for distressed export-oriented and domestic shipbuilding companies in a bid to keep the sector operational and improve loan recovery by banks.

Under the facility, according to a central bank circular issued today, borrowers will have to make a 3 percent down payment on their outstanding loan balance to qualify for the facility.

They must pay 1.5 percent at the time of application and the rest within the next six months.

Defaulters will be able to reschedule or restructure their loans for up to 10 years, including a maximum two-year grace period, depending on the borrower’s repayment capacity and business prospects, as per the circular.

During the grace period, interest must be paid on a monthly or quarterly basis, while blocked interest will have to be repaid in instalments after the grace period ends, without additional interest.

Borrowers must submit applications to their banks by June 30, 2026, along with the required down payment.

Banks have been instructed to decide on applications within 60 days of receipt.

The central bank has also instructed all scheduled banks to consider case-by-case applications from genuinely affected shipbuilders for special rescheduling of their classified loans as of December 31, 2025.

For loans that were previously rescheduled under an earlier 2023 circular, banks may grant an additional two-year extension, subject to a further 2 percent down payment.

The central bank said the move became necessary due to disruptions in global supply chains, geopolitical instability in Europe, and a global economic slowdown that hurt the cash flows of shipbuilders beyond their control.

BB also clarified that firms found guilty of fraud, willful default, or loan manipulation will not be eligible for the facility.

Before approving any rescheduling, banks must conduct a special inspection to verify whether the borrower was genuinely affected by circumstances beyond their control.

Islamic banks have been asked to apply the same policy in line with Shariah principles.

The circular takes immediate effect under Section 45 of the Bank Company Act, 1991.

Bankers say the move could provide breathing space to the struggling shipbuilding sector, which has significant export potential but has faced financial stress in recent years due to global market volatility.

At the end of 2024, total outstanding loans in the shipbuilding and ship-breaking industry stood at Tk 20,506 crore, of which Tk 8,031 crore had become defaulted, according to Bangladesh Bank data.