Bangladesh Bank announces Tk60,000 cr boost for shuttered factories

Highlights

- Officials say its country's largest post-pandemic recovery initiative

- Tk 41,000 crore to be through refinancing schemes

- Over 1,200 industrial units reportedly identified for rehabilitation support

Bangladesh Bank (BB) announced a Tk 60,000 crore stimulus package targeting closed and struggling factories, export industries, agriculture, and small businesses, in what officials describe as the country’s largest post-pandemic industrial recovery initiative.

BB Governor Md Mostaqur Rahman unveiled the package at a press briefing at the central bank headquarters in Motijheel on Saturday.

At the program, Rahman said, the programme aims to restore production, generate employment, and revive investor confidence amid mounting stress in the banking and manufacturing sectors.

“This initiative is intended to return the economy to a growth- and employment-oriented path,” the governor said earlier while outlining his broader recovery agenda after taking office.

He also pledged “policy support, necessary incentives and stronger banking sector coordination” to reopen industries shut over the past one and a half years.

According to Bangladesh Bank, Tk 41,000 crore of the package will be channelled through refinancing schemes involving banks with excess liquidity, while the remaining Tk 19,000 crore will come directly from BB funds under government guarantees.

The central bank said the package is designed to tackle the combined fallout of post-Covid economic disruptions, high borrowing costs, dollar shortages, the Russia-Ukraine war, and collapsing investor confidence that forced hundreds of factories to either suspend operations or shut down entirely.

More than 1,200 industrial units have reportedly been identified for rehabilitation support.

Under the refinancing framework, Tk 20,000 crore has been allocated for reopening closed industrial and service-sector enterprises, Tk 10,000 crore for agriculture and rural activities, Tk 5,000 crore for cottage, micro, small and medium enterprises (CMSMEs), and Tk 3,000 crore each for export diversification and a North Bengal agricultural hub initiative.

Bangladesh Bank will additionally launch several specialised financing windows from its own funds, including Tk 5,000 crore for pre-shipment credit refinancing, Tk 5,000 crore for cottage and micro entrepreneurs, and dedicated support for leather goods, shrimp and fish exports, startups, green financing, overseas employment, and unemployed youth.

The governor said lending rates for large industries under the scheme would remain around 7 percent at the customer level, supported by government interest subsidies. Smaller borrowers may face slightly higher rates depending on risk and sector classification.

The industrial revival drive is also closely linked to the government’s broader push to reopen closed state-owned jute mills and distressed manufacturing units through private investment and public-private partnerships.

Officials say the strategy is intended to accelerate employment generation while reducing pressure on the state to directly operate loss-making enterprises.

Bangladesh Bank spokesperson Arif Hossain Khan earlier said Governor Rahman had instructed officials to actively support initiatives aimed at restarting factories that shut down over the past 18 months.

“Necessary policy assistance will be provided to make the economy more growth and employment-oriented,” the spokesperson quoted the governor as saying.

The governor has also signalled a review of the country’s high interest rate regime, which many industrialists blame for worsening the investment slowdown.

“Necessary steps will be taken after reviewing the issue of high interest rates that are creating obstacles to investment,” he said, while stressing the need to balance credit growth with inflation control.

The announcement comes as Bangladesh’s banking sector faces a severe crisis driven by soaring default loans, capital shortages, and liquidity stress.

During the briefing, the governor alleged that nearly Tk 5 lakh crore had effectively disappeared from the banking system through fraudulent and unsecured lending practices, warning that rebuilding financial discipline would take years.