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Banks, collateral, court cases stall factory revival funds
Daily Sun Report, Dhaka
Published: 19 Oct 2026, 12:00 AM
Only Tk561 crore, less than 3% of the Tk20,000 crore fund for reopening closed factories, had been disbursed by 15 October, with business leaders citing collateral requirements, restrictions on defaulting borrowers, pending court cases and banks’ reluctance to lend as the main barriers.
Another Tk929.50 crore is under process, Bangladesh Bank data show.
The fund is part of a Tk62,000 crore stimulus package, of which Tk11,959.82 crore, less than one-fifth, has been disbursed and Tk2,560 crore is under process five months after its announcement.
The two together come to Tk14,519.79 crore, less than one-quarter of the total, according to a Bangladesh Bank press release.
Bankers, for their part, cite rising non-performing loans, insufficient collateral and incomplete documentation as the reasons for delays in approving applications.
The package was announced at Tk60,000 crore and later raised to Tk62,000 crore.
The package is meant to stimulate economic activity, revive industrial production, support businesses, boost exports and create jobs for 2.5 million people through reopened factories, expanded production and agricultural development.
The Tk20,000 crore fund targets large industrial and service-sector enterprises that are fully or partly closed, or operating below capacity because of working-capital shortages.
Export-oriented businesses and those with strong export potential get priority.
Eligible entrepreneurs can borrow at up to 7%, with the government bearing the remaining 6 percentage points of interest.
Firms struggling mainly because of management failures, technological inefficiency or marketing problems are not automatically eligible.
Former Bangladesh Bank chief economist Dr Mostafa K Mujeri stressed the need for proper scrutiny before lending.
He warned that extending loans merely to meet disbursement targets could create fresh problems in the banking sector.
Bankers cited rising non-performing loans, insufficient collateral and incomplete documentation as the main reasons for delays in approving applications.
Bangladesh Bank Executive Director and spokesperson Arief Hossain Khan said applications from banks were being reviewed and processed promptly.
He added that banks could file cases again if applications were rejected after borrowers had withdrawn existing cases as part of the process.
Businesses cite lending hurdles
Business leaders named default-loan restrictions, collateral requirements, pending court cases and banks' reluctance to lend as the main obstacles.
Anwar-ul Alam Chowdhury (Parvez), president of the Bangladesh Chamber of Industries, told the Daily Sun that banks were reluctant to risk lending to closed factories and often asked for mortgages. Businesses unable to offer collateral found it difficult to secure financing, he said.
He also urged support for factories that were still operating but at risk of closure, and for firms facing working-capital shortages.
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association, said entrepreneurs wanted to use the fund but were not getting cooperation from banks.
Some banks would not accept applications and others discouraged applicants, he said. He also pointed to complexities in the central bank's circular.
Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association, said restarting an existing factory was quicker than building a new one.
He called for relaxing some lending conditions to speed up disbursement.
Business leaders also proposed scrapping the 2% cash deposit that borrowers must pay to regularise their default status, simplifying application procedures and speeding up bank board decisions.
Scheme-wise disbursement
According to the Bangladesh Bank statement, the pre-shipment credit refinancing scheme recorded the highest disbursement at Tk6,917 crore.
The special scheme for cottage and small entrepreneurs received Tk2,500 crore, while about Tk908 crore was disbursed from the working-capital refinancing fund for cottage, micro, small and medium enterprises. The closed industrial and service-sector scheme received Tk561 crore, with Tk929.50 crore under process.
The creative economy financing scheme received Tk500 crore, while the agricultural refinancing scheme disbursed Tk293 crore of its Tk10,000 crore allocation. The overseas employment financing scheme received Tk200 crore.
The refinancing scheme for agro-based special economic centres in northern Bangladesh received Tk48.67 crore of its Tk3,000 crore fund, and the startup financing scheme disbursed Tk32.59 crore, with another Tk5 crore under process.
Funds were also awaiting disbursement under several other schemes: Tk1,000 crore for employment financing for unemployed youths, Tk527 crore for green factory buildings and industries, and Tk98 crore for leather goods and footwear exporters.
Nothing has been disbursed or is under process under three schemes: export diversification through refinancing (Tk3,000 crore), rural economic activities (Tk1,000 crore) and frozen shrimp and related sectors (Tk2,000 crore).