Bangladesh Stimulus Funds Edge Past Tk12,000 Crore as Factory Restart Scheme Remains Subdued

Bangladesh Bank's flagship financing package, launched to restart idle factories, ease credit constraints for smaller firms, and inject fresh momentum into an economy under pressure, has now released close to Tk12,000 crore. The figure, drawn from the central bank's mid-October progress report, marks a gradual advance on an initiative first unveiled in May, yet it also underlines how unevenly the money is reaching the sectors that were supposed to benefit most.

The package was structured around a total envelope of Tk60,000 crore. Roughly two-thirds of that amount was to be mobilised from commercial banks sitting on surplus liquidity, while the remainder would come from the central bank's own resources under a government guarantee. Loans under most schemes carry a capped interest rate of about 7 percent, an intentional effort to make financing cheaper than prevailing market rates and to encourage banks to lend rather than hold cash. The original ambition was substantial: reopen factories that had shut down, support cottage and micro enterprises, strengthen agricultural and rural credit, assist export-related activities, and ultimately help create up to 25 lakh direct and indirect jobs.

Five months later, the picture is mixed. The strongest performance has come from the pre-shipment credit refinance facility aimed at exporters. That scheme has already released more money than its initial target allocation, reflecting continued demand from the ready-made garment and related industries that still generate the bulk of the country's foreign-exchange earnings. Support for cottage and micro-sector entrepreneurs has also moved at a respectable pace, covering roughly half of its dedicated allocation. These two segments together account for the large majority of the funds that have actually left the central bank and reached borrowers.

The contrast with the package's largest single component is stark. The scheme earmarked for closed industrial and service-sector units carries an allocation of Tk20,000 crore, yet disbursements stand at only a few hundred crore. Applications have risen in recent weeks and a further sum is under processing, but the overall utilisation rate remains very low relative to the size of the window. Several other schemes—those focused on agricultural hubs in the northern region, export diversification, startups, creative industries, and rural employment—have recorded little or no disbursement at all. Across the full set of 15 schemes, total applications have reached roughly Tk14,500 crore, meaning that about one-quarter of the package has either been released or is in the pipeline. Direct releases, however, sit closer to one-fifth of the overall amount.

Bankers and business representatives offer different explanations for the slow movement. Lenders cite incomplete documentation, inadequate collateral, and concern over the already elevated level of non-performing loans in the system. Entrepreneurs counter that banks remain reluctant to extend credit even when applications meet formal criteria, and that the process of obtaining central-bank approval adds further delay. Bangladesh Bank has indicated that it continues to review applications promptly and has been examining ways to ease some of the conditions attached to the funds. Whether those adjustments will accelerate lending remains an open question.

The partial progress arrives at a delicate moment for the broader economy. Private-sector credit growth has been weak for an extended period, energy costs remain high because of elevated international fuel prices linked to conflict in the Middle East, and inflation, while down from earlier peaks, is still elevated enough to squeeze household purchasing power and business margins. Strong remittance inflows have provided a helpful buffer for the external accounts, yet domestic investment and industrial capacity utilisation have yet to show a decisive rebound. In that environment, the speed and reach of the stimulus package function as one practical test of whether credit conditions are loosening enough to support recovery.

Central bank officials have previously expressed the hope that fuller utilisation of the package could help stabilise industrial output and employment. At the current pace, however, the bulk of the money still sits unused, and the schemes most directly tied to reopening factories and generating new jobs have advanced the least. The coming months will show whether the recent increase in applications for closed-factory financing translates into actual disbursements, or whether deeper structural issues in the banking system continue to limit the impact of the initiative. For an economy seeking to move beyond a period of subdued growth, the difference between funds that have been announced and funds that have reached factory floors will matter considerably.