Momentum Builds Slowly as Banks Release Fresh Funds to Restart Idle Factories
Banks have released more than five times the amount disbursed by September, but industry bodies say many eligible factories are still waiting for funds.
Four months after Bangladesh Bank rolled out a large refinancing window to bring shuttered factories back to life, the flow of money has finally begun to quicken, though the pace remains far short of what policymakers had hoped for when the package was announced.
Under the dedicated Tk20,000 crore scheme for closed industrial and service units, commercial banks have now released Tk560 crore to borrowers. That is more than five times the amount that had been handed out by the end of September, when only Tk110 crore had reached eight companies. Loan applications forwarded to the central bank have climbed to Tk1,490 crore, leaving roughly Tk929 crore still sitting in the processing pipeline.
These figures form part of a much larger Tk60,000 crore stimulus package that contains fifteen separate refinancing and pre-financing windows. Across the entire package, banks have so far disbursed around Tk12,000 crore, with another Tk2,500 crore or so under active review. While the absolute numbers look modest relative to the total allocation, the recent acceleration inside the closed-factory window is the first clear sign of movement after a long period of inertia.
The scheme was unveiled in June with the stated ambition of reopening idle plants and supporting the creation of roughly 25 lakh jobs. In practice, the early months were almost entirely consumed by paperwork. Banks had to collect applications, verify eligibility, assess business viability and then submit the files to Bangladesh Bank. Many lenders moved cautiously because they, not the central bank, carry the full credit risk. Even though they receive lower-cost funds from the central bank, any default will hit their own balance sheets. That risk allocation has slowed approvals, especially for factories that have already closed and therefore present limited collateral or uncertain cash flows.
Industry representatives remain unconvinced that the money is reaching the units that need it most. The Bangladesh Garment Manufacturers and Exporters Association has said that none of the nearly two hundred factories it certified as meeting the scheme's criteria has received funds yet. Several individual owners have echoed the same complaint, noting that their applications were cleared weeks ago but the cash has still not arrived. The gap between certification by industry bodies and actual disbursement by banks has become a point of friction.
Performance across the rest of the package is sharply uneven. The pre-shipment credit window has already disbursed more than its original allocation, reflecting strong demand from exporters who need working capital before shipping. The cottage and micro-enterprise scheme has released half of its target. In contrast, several other windows—those aimed at rural economic activity, export diversification, frozen shrimp, leather goods, green factories and unemployed youth—have recorded either zero or negligible disbursement. Three schemes with a combined allocation of Tk6,000 crore have so far attracted neither applications nor disbursements.
The slow start has prompted discussion inside policy circles about whether lending conditions should be eased further. Interest rates on the loans are already capped at relatively low levels, yet bankers continue to cite incomplete documentation, weak collateral and high non-performing loans elsewhere in their portfolios as reasons for caution. Business leaders, for their part, argue that the banks are simply unwilling to take risk and that the central bank needs to push harder if the package is to deliver on its employment promise.
Whether the recent rise in disbursements will translate into actual factory restarts is still an open question. Releasing funds is only the first step; the money must then be used to pay wages, buy raw materials, restore machinery and restart production. Many of the plants that closed did so because of a combination of high energy costs, weak demand and earlier liquidity shortages. A one-time loan may not be enough if those underlying pressures remain. At the same time, the fact that disbursements have at least begun to rise offers a modest positive signal after months in which the scheme existed largely on paper.
As banks continue to process the remaining applications, attention will shift from the volume of money released to the number of factories that actually reopen and the number of workers who return to their jobs. That outcome will determine whether the revival scheme is remembered as a useful bridge for struggling industries or as another well-intentioned package that moved too slowly to make a difference.