The Bangladesh Bank (BB) is currently finalizing a massive low-cost revival fund valued between BDT 15,000 crore and BDT 20,000 crore, aiming to breathe new life into the national economy and restore the country’s industrial landscape.

This 'Factory Revival Fund' is specifically designed to facilitate the reopening of shuttered factories across the country that were forced to close due to unavoidable circumstances, particularly those impacted by the unrest surrounding the 2024 July-August movement.

Prime Minister Tarique Rahman is expected to formally announce the formation of the fund later this week, following through on a vision he shared during a May Day rally organized by the Jatiyatabadi Sramik Dal last Friday.

During that address, the Prime Minister emphasized that reopening closed plants is essential to "ensure workers’ rights and strengthen the economy."

The initiative targets viable businesses with market potential that remain committed to debt repayment, though the central bank has clarified that factories involved in significant financial crimes, such as money laundering or major fraud, will be strictly excluded.

Eligible entities will gain access to low-interest working capital loans, and in specific cases, term loans may also be provided.

While the standard interest rate for these loans is expected to be set at 13 percent, a 5 percent government subsidy is under consideration to bring the effective rate down to 8 percent to ease the financial burden on entrepreneurs.

To manage the technicalities and rollout of the fund, a high-level 19-member committee led by BB Deputy Governor Md. Kabir Ahmed has commenced drafting a comprehensive policy.

This committee, which includes several executive directors and senior officials, is tasked not only with managing the fund but also with identifying additional support measures required to get these units back into production.

As part of the preliminary phase, the central bank has directed commercial banks to submit detailed lists of fully and partially closed factories, focusing specifically on those with existing loan exposures exceeding BDT 100 crore.

According to a local media, BB spokesman Arief Hossain Khan confirmed the ongoing efforts, noting that "discussions are ongoing with the government on what type of support can be provided to revive closed factories. Once the discussions are finalised, the fund will be formed and the policy will be issued."

The regulatory body held a consultative meeting with commercial banks on Sunday to refine the implementation strategy and seek expert advice.

“We sought advice from bankers on how to identify genuinely affected factories and those intending to repay bank loans, along with other details of the policy in this regard,” a central bank official who attended the meeting disclosed.

During these deliberations, bankers emphasized the need for safeguards, requesting either a government or BB guarantee to protect against potential defaults or "bad loans."

Additionally, lenders demanded that entrepreneurs provide collateral beyond existing securities for new lending and sought the authority to appoint consultants to monitor factory operations and ensure the appropriate use of disbursed funds.

Based on these consultations, the central bank is considering three primary strategies for the revival: relaxing downpayment requirements for loan rescheduling, providing immediate capital infusions upon reopening, and offering specialized banking facilities for import-export activities, such as opening Letters of Credit (LCs) with minimal margins.

Banks will be granted the flexibility to extend these benefits based on the historical behavior and creditworthiness of the factory owners prior to closure.

This upcoming fund represents a continuation of the financial reforms initiated following the fall of the Awami League-led government in August 2024.

Under the subsequent interim administration, the Bangladesh Bank had previously introduced an easy loan rescheduling policy, setting the stage for this more aggressive capital injection to restart the nation's industrial engines.