Blog Details

Interest Waiver and Full & Final Settlement for Classified Borrowers in Bangladesh

A classified (defaulted) borrower in Bangladesh can settle a loan by paying less than the bank's full claim. The bank waives part or all of the interest, and the borrower pays the principal plus whatever interest is not waived. The principal itself can never be waived. Until 31 December 2026 there is also a one-time Special Exit window: a bad/loss borrower who pays in one lump sum can have all charged and uncharged interest waived.

This article explains the three routes to a waiver, the Bangladesh Bank circulars behind each, who is excluded, and how to apply step by step.

Key terms

Classified loan (শ্রেণীকৃত ঋণ): a loan overdue long enough to be graded Sub-standard (SS), Doubtful (DF) or Bad/Loss (BL, মন্দ/ক্ষতিজনক).

Charged interest (আরোপিত সুদ): interest already debited to the loan account.

Uncharged interest (অনারোপিত সুদ): interest calculated but kept off the account, usually in a suspense or blocked account once a loan is classified.

Full and final settlement (সমন্বয়): the bank accepts an agreed amount, closes the account and releases the security.

Islamic banks: "interest" means profit (মুনাফা), often booked as compensation (ক্ষতিপূরণ). The same circulars apply to investment (বিনিয়োগ) and profit, as BRPD Circular 06/2022 states expressly.

The Bangladesh Bank circulars

The rules sit in three groups of circulars: interest waiver, exit (settlement), and the related rescheduling, restructuring and recovery rules. All are issued under the Bank Company Act, 1991 and published on the Bangladesh Bank circulars page. Newest first:

BRPD-2 Circular No. 04 (20 Aug 2026) lists the mediation institutions enlisted for ADR. Each bank must also have its own board-approved waiver and exit policy, which can be stricter but never more lenient than these circulars.

Route 1: Ordinary interest waiver (BRPD Circular 06/2022)

This is the standing rule for any interest waiver, at any time. It is narrow: the bank must at least recover its cost of funds, so normally only the interest above that cost can be waived.

When a waiver is allowed. The 1991 circular lists events beyond the borrower's control: the borrower's death, natural disaster, epidemic, plague (মড়ক), river erosion, other calamities, or a closed project. Bangladesh Bank issued the 2022 circular because banks were waiving interest without these grounds.

The rules (para 2 of the circular):

Principal (আসল) can never be waived.

No waiver on loans created by fraud, or for wilful defaulters.

No waiver by debiting the bank's income account. For state-owned and specialised banks this was confirmed by BRPD CL 18/2022.

The board of directors approves. Management may decide waivers on loans with principal up to Tk 10 lakh.

The bank must recover its cost of funds, meaning its cost of funds as at 31 December of each year whose interest is waived. This condition can be relaxed only if:

the project has been closed for 3 years; or

the cost of funds cannot be recovered even by selling the security, the project assets and the owners' personal assets; or

recovery has failed despite legal action; or

the borrower died, or was hit by disaster, epidemic, plague or river erosion and cannot repay.

Relaxing the cost-of-funds rule needs the opinion of the Head of Internal Control and Compliance (HICC), through internal audit.

Where financial statements are required, the bank reviews the last 3 years. If net profit after tax or owners' equity is positive, no waiver is allowed.

Loans to bank directors, their families or related firms need Bangladesh Bank's prior approval.

The bank must assess the waiver's effect on its own capital and profitability.

BRPD CL 18/2022 added that these rules apply equally to written-off loans.

Route 2: Exit facility (BRPD Circular 13/2024, amended by CL 05/2025)

The Exit policy lets a borrower whose business has failed for reasons beyond their control settle the loan in instalments over up to 3 years, with eligible interest waived at the end. It has no expiry date.

Who it is for. Classified loans whose recovery prospects are weak, and loans where the project or business closed for uncontrollable reasons or was closed by the borrower. Regular loans can also get Exit.

The terms:

Conditions while the Exit runs:

The loan keeps its old classification until fully repaid. The borrower stays a defaulter and is reported to the CIB as "Exit (SS/DF/BL)".

Exit is not counted as rescheduling under BRPD 16/2022, and an Exit account can never be rescheduled or restructured.

No new loans to the borrower until the Exit loan is fully settled.

Security is not released before full settlement. A three-party deal between bank, borrower and buyer may sell mortgaged property to settle the loan.

If the borrower misses payments, the bank takes legal action.

Route 3: Special Exit (BRPD-1 Circular Letter 23/2026), until 31 December 2026

The Special Exit is the most generous of the three routes: a bad/loss borrower who settles in one payment can have all charged and uncharged interest waived, without the bank first recovering its cost of funds. It works only until 31 December 2026.

Who qualifies:

Loans classified Bad/Loss (মন্দ ও ক্ষতিজনক) on the base date of 30 June 2026.

Bad/loss loans rescheduled between 6 August 2024 and 30 June 2026.

Priority goes to short-term agricultural loans and cottage, micro and small (CMSME) loans, but other loans are not excluded.

The terms:

The board of directors must approve each case, on the basis of the banker-customer relationship.

The borrower pays the settled dues (সমুদয় দায়) in one single payment (এককালীন). Instalments are not allowed.

For waiving all charged and uncharged interest, two old conditions are relaxed:

the cost-of-funds rule in para 2(ঙ) of BRPD Circular 06/2022; and

the bar in para 2(গ) of BRPD CL 18/2022 on state-owned and specialised banks waiving by debiting their income account.

Banks must write to eligible borrowers to inform them of the facility.

What it means in money. At most, the borrower pays the principal plus any non-interest charges (legal costs, insurance and the like), and the rest of the claim is waived. The bank does not have to waive everything; it decides the amount.

Watch points:

The circular relaxes only the two conditions above. The other rules of BRPD 06/2022 are not mentioned, so expect the bank to apply them: no waiver for wilful defaulters or fraud, and Bangladesh Bank approval for director-related loans.

Board approval takes time. Apply early so the board decision and the payment both fall on or before 31 December 2026. An offer to pay "within 3 months" from October or later runs past the deadline.

Cite the circular by its correct name: বিআরপিডি-১ সার্কুলার লেটার নং-২৩, তারিখ ২৯ জুন ২০২৬.

Related routes that are not full settlement

These do not close the loan, but they often sit beside a waiver request or are the fallback if a waiver is refused.

Rescheduling (BRPD Circular 16/2022). The loan is regularised and repaid over a new term. A classified loan can be rescheduled up to 3 times, a 4th time in special cases. For the 1st and 2nd rescheduling:

The 3rd and 4th times are each at least 1 year shorter and need 1% more down payment. Agricultural and small loans get 3 years the first time. Interest can be waived alongside rescheduling; the CIB then shows the loan as RSIW-1 to RSIW-4. Wilful defaulters and borrowers who diverted funds are refused.

Policy support for affected borrowers: special rescheduling (BRPD 07/2025, CL 16/2026, CL 30/2026). A separate track, outside BRPD 16/2022, for viable businesses hurt by causes beyond their control. It is approved by the bank's board, without Bangladesh Bank's approval. The latest terms:

Other conditions:

Instalments paid before the application do not count as down payment. The application takes effect only once the down payment is encashed (CL 16/2026).

The rescheduled loan is shown as SMA, and in the CIB as "Special RSDL" until repaid.

The bank may set a preferential rate up to 1 percentage point below the lowest rate for that sector.

Missing 3 monthly or 1 quarterly instalment ends the facility, and the loan is reclassified.

Wilful defaulters and loans created by fraud are excluded.

Borrowers who already received support under 07/2025 or from the selection committee may apply again under CL 30/2026; grace time already used counts toward the 2 years.

Deadlines: new applications closed on 30 September 2026, and banks must decide all applications, with down payment, by 31 December 2026.

About a "1% down payment". No current circular sets one. The figure comes from three places:

individual approvals by Bangladesh Bank's selection committee in 2025 (Daily Observer), a route since withdrawn;

the 2015 large-loan restructuring scheme (Daily Star);

a press report that from 22 February 2026 half the down payment could be paid at application and the rest within six months (Prothom Alo). Neither CL 16/2026 nor CL 30/2026 cites such a circular.

Ask for the circular number and date before relying on a 1% figure.

Write-off (BRPD 09/2025, partial write-off BRPD 11/2025). The bank removes the loan from its balance sheet, but the borrower still owes it and remains a defaulter. Waivers on written-off loans follow BRPD 06/2022 (per CL 18/2022), and Exit can also be used on them.

Mediation. Under BRPD Circular 11/2024 banks should use alternative dispute resolution (ADR) to recover defaulted loans; BRPD-2 Circular 04/2026 enlists the mediation institutions. A settlement can also be reached through mediation in a pending Artha Rin Adalat (money loan court) case.

Pending cases (BRPD-1 CL 25/2026). Before getting any Bangladesh Bank policy support, the borrower must withdraw writ petitions and other cases against the government, Bangladesh Bank or the bank, and give an affidavit listing the withdrawn cases.

Who cannot get a waiver

Anyone asking to waive principal. No circular allows it.

Wilful defaulters (ইচ্ছাকৃত খেলাপি), identified under BRPD Circular 06/2024 and CL 09/2025.

Loans created by fraud or forgery (জাল-জালিয়াতি).

Profitable borrowers under the ordinary route. If the last 3 years' financial statements show positive net profit after tax or positive owners' equity, BRPD 06/2022 bars a waiver.

Bank directors, their families and related firms without Bangladesh Bank's prior approval, and subject to section 28 of the Bank Company Act, 1991.

Special Exit applicants whose loans are not Bad/Loss on 30 June 2026, or who cannot pay in one lump sum by 31 December 2026.

A borrower who was a victim of fraud, disaster or genuine business failure is not a wilful defaulter. The application should show the real cause of default with evidence, because that is what separates the two.

How to apply, step by step

Choose the route first:

Steps:

Get a statement of dues from the branch, split into principal, charged interest, uncharged (suspense/blocked) interest and other charges, as at a stated date.

Confirm the classification (SS, DF or BL) and its date. For the Special Exit, it must be Bad/Loss on 30 June 2026.

Arrange the money. For the Special Exit, the full settlement amount must be ready in one payment. If it comes from selling mortgaged property, propose a three-party sale (bank, borrower, buyer).

Withdraw pending cases against the government, Bangladesh Bank or the bank, if any, and prepare the affidavit (CL 25/2026).

Write the application to the branch manager, addressed for onward approval to the head office and board. Include:

the loan account(s), sanction history and current dues;

the cause of default with evidence (business loss, unrealised receivables, closure, illness, disaster);

the exact amount offered and the exact amount sought as waiver, matching the bank's figures;

the payment plan: one lump sum by a fixed date for the Special Exit, or the 5% down payment and schedule for Exit;

the correct circular reference.

Attach documents: trade licence, NID, TIN, bank statements, financial statements for the last 3 years where applicable, valuation of mortgaged property, proof of the source of funds, and the affidavit if needed.

Pay any required down payment with the application (5% for Exit).

Follow up. The branch recommends, head office reviews, the HICC gives an opinion where needed, and the board decides. Ask for the approval letter (sanction advice) stating the amount payable, the waiver and the deadline.

Pay exactly as approved, before the deadline in the approval letter.

Worked example (illustrative figures). A loan classified Bad/Loss has total dues of Tk 1,00,00,000: principal Tk 50,00,000, charged interest Tk 20,00,000, uncharged interest Tk 28,00,000 and other charges Tk 2,00,000.

Under the Special Exit, the most the bank can waive is the interest of Tk 48,00,000. The borrower then pays Tk 52,00,000 (principal plus other charges) in one payment by 31 December 2026.

Under the ordinary route, the bank would also collect its cost of funds on the principal, so the waiver would be smaller.

Writing the application

A strong application lets the board approve without asking for anything more: it states one clear request, figures that match the bank's ledger, the circular that allows it, and evidence that the default was genuine.

Structure:

Letterhead and date. Business letterhead, proprietor's name, address and mobile. Never leave the date blank.

Address. The branch manager, "through proper channel" to the managing director and board.

Subject line. Name the facility, the circular with its date, the total dues, the amount offered and the waiver sought, in one sentence.

Background. When the account was opened, the limits sanctioned and renewed, and how the loan was used.

Cause of default. Specific, dated and supported: unrealised receivables with amounts, closure periods, losses, illness, disaster. Avoid general complaints, and avoid political accusations unless documented.

Present position. Business status, assets, income, and the source of the settlement money (sale of mortgaged property, family funds).

The breakdown table. Total dues split into principal, charged interest, uncharged interest and other charges; then amount payable and amount to be waived. Each line must add up.

The offer. Exact amount, one lump sum or instalments as the circular requires, and a firm date within the deadline.

Undertakings. No pending case against the bank (or that they will be withdrawn), consent to CIB reporting, and that the waiver lapses if payment is missed.

Prayer and signature. Signed by the proprietor or authorised directors, with a board resolution for a company.

Do and don't:

Model application (Special Exit), Bangla. Replace the bracketed parts.

তারিখ: [দিন/মাস/২০২৬]

বরাবর
ব্যবস্থাপক
[ব্যাংকের নাম] পিএলসি
[শাখার নাম] শাখা, [জেলা]
(যথাযথ কর্তৃপক্ষের মাধ্যমে ব্যবস্থাপনা পরিচালক ও পরিচালনা পর্ষদ বরাবর)

বিষয়: বাংলাদেশ ব্যাংকের বিআরপিডি-১ সার্কুলার লেটার নং-২৩, তারিখ ২৯ জুন ২০২৬ (বিশেষ এক্সিট নীতিমালা) এর আওতায় “মেসার্স [প্রতিষ্ঠানের নাম]” এর বিনিয়োগ/ঋণ হিসাবের মোট দায় টাকা [মোট দায়]/- এর মধ্যে টাকা [পরিশোধযোগ্য অংক]/- এককালীন পরিশোধের শর্তে মুনাফা/সুদ বাবদ টাকা [মওকুফের অংক]/- মওকুফপূর্বক হিসাব পূর্ণ ও চূড়ান্ত সমন্বয়ের আবেদন।

জনাব,
আসসালামু আলাইকুম।

১। আমি মেসার্স [প্রতিষ্ঠানের নাম] এর স্বত্বাধিকারী। অত্র শাখা হতে [সাল] সালে টাকা [অংক]/- এর [বিনিয়োগ/ঋণ সুবিধার ধরন] গ্রহণ করি, যা সর্বশেষ [সাল] সালে নবায়ন করা হয়।

২। [খেলাপি হওয়ার কারণ, তারিখ ও অংকসহ সংক্ষেপে; প্রমাণপত্র সংযুক্ত]। ফলে হিসাবটি [সাল] সালে শ্রেণীকৃত হয় এবং ৩০ জুন ২০২৬ তারিখে মন্দ/ক্ষতিজনক মানে শ্রেণীকৃত রয়েছে।

৩। শাখা কর্তৃক প্রদত্ত [তারিখ] ভিত্তিক দায় বিবরণী অনুযায়ী:
   মূল (আসল): টাকা [অংক]/-
   আরোপিত মুনাফা/সুদ: টাকা [অংক]/-
   অনারোপিত মুনাফা/সুদ: টাকা [অংক]/-
   অন্যান্য চার্জ: টাকা [অংক]/-
   মোট দায়: টাকা [অংক]/-

৪। আমি টাকা [অংক]/- (কথায়: [অংক কথায়] টাকা) আগামী [তারিখ, ৩১ ডিসেম্বর ২০২৬ এর পূর্বে] তারিখের মধ্যে এককালীন পরিশোধ করতে সম্মত আছি। উক্ত অর্থ [উৎস, যেমন বন্ধকী সম্পত্তি বিক্রয়] হতে সংস্থান করা হবে।

৫। আমি অঙ্গীকার করছি যে, ব্যাংকের বিরুদ্ধে আমার কোনো মামলা বিচারাধীন নেই [অথবা: উক্ত মামলা প্রত্যাহার করা হবে]। নির্ধারিত তারিখের মধ্যে পরিশোধে ব্যর্থ হলে এই মওকুফ সুবিধা বাতিল বলে গণ্য হবে।

অতএব, উপরোক্ত সার্কুলারের আলোকে টাকা [মওকুফের অংক]/- মওকুফপূর্বক টাকা [পরিশোধযোগ্য অংক]/- এককালীন গ্রহণ করে হিসাবটি পূর্ণ ও চূড়ান্তভাবে সমন্বয়, বন্ধকী দলিল অবমুক্তি এবং সিআইবি হালনাগাদ করার জন্য বিনীত অনুরোধ করছি।

বিনীত
[স্বাক্ষর]
[নাম], স্বত্বাধিকারী
মেসার্স [প্রতিষ্ঠানের নাম]
মোবাইল: [নম্বর]

সংযুক্তি: দায় বিবরণী, ট্রেড লাইসেন্স, এনআইডি, টিআইএন, খেলাপির কারণের প্রমাণপত্র, অর্থের উৎসের প্রমাণ।

After settlement, and common mistakes

Once the approved amount is paid in full, the waiver becomes final and the borrower should collect proof that the account is closed. Under the Exit route, the borrower stays a defaulter in the CIB until the last instalment is paid.

Ask the bank for:

☐ A no-dues certificate or full and final settlement letter stating the amount paid and the amount waived

☐ Updated CIB reporting showing the loan as fully adjusted

☐ Release of mortgage: a deed of redemption and return of the original title deeds

☐ Return or cancellation of post-dated cheques and personal guarantees

☐ Withdrawal of any Artha Rin Adalat or cheque-dishonour case filed by the bank

Mistakes that get applications refused or delayed:

Figures that do not add up, or that differ from the bank's own statement of dues.

Asking to waive principal.

Citing the wrong circular, or a circular number without its date.

Offering instalments, or a "3 month" payment window, under the Special Exit, which needs one payment by 31 December 2026.

Applying too late for the board to meet before the deadline.

Applying for policy support while a writ or other case against the bank is still pending.

If the bank refuses

A borrower has no legal right to a waiver, rescheduling or exit. Every circular says the bank "may" grant it with board approval. So remedies work on the process: a delayed decision, a refusal that breaks a circular, unequal treatment. Once the bank goes to court, they also work through court-supervised settlement. Escalate in this order.

1. Inside the bank

Ask in writing for a decision and the reasons. Cite the time limits: an Exit application must be settled within 60 days (BRPD 13/2024, para 2(গ)), and a rescheduling application with down payment within 3 months (BRPD 16/2022, para 3(3)).

Escalate to the managing director and the board through head office, with a copy to the bank's complaint cell.

Answer each stated reason with documents, or revise the offer: a larger lump sum, a third-party sale, or a switch to another route.

2. Bangladesh Bank complaint

File with Bangladesh Bank's Customers' Interest Protection Centre (CIPC): hotline 16236, email bb.cipc@bb.org.bd, or the online complaint form (details). The strongest grounds are breaches of a circular:

no decision within the time limit;

conditions stricter or looser than the circular for some borrowers but not others;

not informing eligible borrowers of the Special Exit, which banks must do by letter (CL 23/2026, para 4);

asking for things no circular requires.

Expect CIPC to take the matter up with the bank. It is unlikely to order a waiver, because that is the bank board's decision under every circular.

3. In the Artha Rin Adalat (money loan court)

The Artha Rin Adalat Ain, 2003 gives the borrower several chances to settle, and some defences:

The court's limits matter just as much:

The court cannot cut or waive interest charged up to the date the case was filed (section 50(1)). Any waiver must come from the bank, usually inside mediation.

The borrower cannot sue the bank in this court, or counter-claim, over the loan (section 18(2)).

Appeals need deposits: 50% of the decreed amount (section 41: High Court Division within 60 days if over Tk 50 lakh, District Judge within 30 days otherwise), and 75% for revision (section 42).

After a decree, interest runs at 12% a year, 16% if the borrower appeals, 18% at the Appellate Division, and 25% if a writ against the decree is dismissed (section 50).

4. Writ petition (High Court Division, Article 102 of the Constitution)

A writ challenges an unlawful act of a public authority, such as Bangladesh Bank or a state-owned bank that ignores its own circulars. Whether a writ lies against a private bank is doubtful, so get legal advice first. Weigh the costs:

Under BRPD-1 CL 25/2026, a borrower with a pending writ or case against the government, Bangladesh Bank or the bank cannot get any policy support. It must be withdrawn, with an affidavit.

A dismissed writ against a decree raises interest to 25% a year.

Writs take time, while the Special Exit ends on 31 December 2026.

In practice, settlement is usually reached through negotiation, a Bangladesh Bank complaint, or court mediation, not through a writ. A lawyer experienced in Artha Rin cases should review the facts before any filing. The Act's text above is from the government's laws website; check for later amendments.

Disclaimer and sources

This article summarises Bangladesh Bank circulars as published on its website up to 10 October 2026. It is general information, not legal or financial advice. Each bank applies its own board-approved policy, and the final waiver is always the bank's decision. Check the original Bangla circular text, and any newer circular, before relying on a point.

Circulars opened for this article:

BRPD-1 Circular Letter No. 30, 31 Aug 2026

BRPD-1 Circular Letter No. 25, 29 Jul 2026

BRPD-1 Circular Letter No. 23, 29 Jun 2026

BRPD Circular Letter No. 05, 10 Mar 2025

BRPD Circular No. 13, 8 Jul 2024

BRPD Circular No. 16, 18 Jul 2022

BRPD Circular Letter No. 18, 24 May 2022

BRPD Circular No. 06, 21 Apr 2022

Also opened: BRPD Circular No. 07, 16 Sep 2025 and BRPD-1 Circular Letter No. 16, 7 May 2026.

Law opened for this article: Artha Rin Adalat Ain, 2003 (as amended up to 2010 on the government site).

Other circulars in the table are listed by title and date from the Bangladesh Bank circulars page, where their PDFs can be downloaded. News coverage: The Financial Express, 1 Jul 2026.