Bangladesh’s central bank is preparing a Tk40,000 crore refinance scheme designed to restart closed industrial factories, protect jobs and bolster export‑oriented production, in a move that reflects widening concerns about economic stagnation and rising unemployment, central bank officials and economists said.
The package, still under review and awaiting approval from the government, would channel funds through commercial banks as low‑cost working capital and medium‑term loans to factories that have shut down or are operating below capacity, officials familiar with the discussions said. More than 1,200 closed or partially idle units have already been identified using data from banks and industry trade bodies.
Under the structure being shaped, Tk20,000 crore would be earmarked for large industries, Tk10,000 crore for cottage, micro, small and medium enterprises (CMSMEs), and another Tk10,000 crore for agricultural support, according to central bank briefings and local business media reports. Loans would be offered on tenures ranging from one year to 18 months to help firms restart operations and utilise idle capacity.
Officials said priority for financing would go to factories with confirmed market demand and orders, while those whose gas and electricity connections remain intact but lack working capital could receive short‑term support. Units with disconnected utilities or extensive machinery damage may require medium‑ or long‑term financing under differentiated terms.
Bangladesh’s industrial sector has faced headwinds from lingering effects of the COVID‑19 pandemic, global supply chain disruptions, tighter financing conditions and fluctuating export markets, contributing to a rise in idle capacity and factory closures. Previous stimulus packages during the pandemic, which totalled over Tk128,000 crore, were financed in part through monetary expansion and are widely seen to have contributed to a build‑up of non‑performing loans.
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Economists welcomed the plan’s intent but stressed that its design and implementation would be critical to its success, particularly in avoiding the revival of non‑viable firms. Fahmida Khatun, executive director of the Centre for Policy Dialogue, said the source of funding and mix of financing matters given ongoing liquidity shortages in many banks and government revenue pressures. “If the central bank directly finances the scheme by creating money, it could add to inflationary pressures,” she said, urging a mix of central bank funds, budgetary allocations and contributions from banks with stronger liquidity.
A senior Bangladesh Bank official acknowledged the risk, noting that injecting new funds through open market operations could have amplified effects through the money multiplier, placing upward pressure on prices and complicating the central bank’s core objective of maintaining price stability.
Dr. Mustafa K Mujeri, former chief economist of Bangladesh Bank, said categorising closed factories based on viability would be essential and that support should be focused on enterprises with sustainable business models and export potential. Analysts say success could not only restore jobs but also boost government revenues through higher tax collections as production resumes.
Bankers involved in consultations have called for risk‑sharing mechanisms such as credit guarantees to protect lenders from the risk of future defaults, and insisted on stricter lending conditions, additional collateral requirements and ongoing monitoring to ensure effective use of funds.
The central bank has said businesses involved in financial irregularities, money laundering or those whose owners have fled abroad will be ineligible for support, underscoring a focus on credit discipline and accountability.
Bangladesh Bank’s planned scheme comes against the backdrop of broader policy directives from the country’s leadership. Prime Minister Tarique Rahman has directed ministries to pursue the reopening of sick and closed factories as part of job creation goals and industrial revival strategies, with particular emphasis on jute and sugar mills, according to government statements.
The central bank is expected to formalise the policy through a circular once final approvals are in place, after which disbursement guidelines and eligibility criteria will be published.
