Callable bonds are bonds that give the issuer (typically a company or government) the right to buy back (redeem) the bond before its maturity date under specified conditions. This allows issuers to take advantage of changing interest rates.
The bond agreement specifies the call date (when the bond can be called) and call price (the redemption price, usually at or slightly above face value).
Issuers use callable bonds primarily when they expect interest rates to fall — they can call the old higher-rate bonds and reissue at lower rates, saving on interest costs. They're also used for financial restructuring.
In Bangladesh, callable bonds are limited in the corporate bond market, though some financial institutions may issue bonds with callable features. Internationally, callable bonds are very common.