The volume of non-performing loans in the country鈥檚 banking sector has skyrocketed by Tk聽2 lakh crore in just one year, reaching a staggering Tk聽3.45 lakh crore at the end of December 2024.
This sharp rise comes as a massive amount of toxic loans previously swept under the carpet through data manipulation during the Awami League regime has now been exposed.
The amount of NPLs reached Tk聽2,84,977 crore in September from Tk 2,11,391 crore in June, Tk聽1,82,295 crore in March of 2024 and Tk 1,45,633 crore in December 2023, according to BB data.
BB officials said that the implementation of stricter monitoring and regulatory practices, eliminating data tampering and adopting international loan classification standards after the fall of the Awami League regime on August 5, 2024 revealed the actual condition of the country鈥檚 banking sector.
These long-overdue corrections have peeled back the layers of deception that kept the true extent of banking sector corruption hidden for years, they said.
About 20 per cent of total bank loans amounting to Tk 17.11 lakh crore was classified as non-performing, the highest ratio in South Asia.
As of December 2024, about 42 per cent of outstanding loans in the state-owned banks and about 15 per cent of outstanding loans in the private banks were classified as non-performing, said Bangladesh Bank governor Ahsan H Mansur at a press briefing at the BB headquarters in the capital Dhaka on Wednesday.
The central bank governor attributed the surge in NPLs to a lack of transparency in reporting bad loans for a long time and the recent changes in loan classification policies.
Previously, loans were classified as overdue after 270 days, but the timeframe has now been reduced to 180 days.
From April 2025, loans will be classified as non-performing within just 90 days.
Despite the alarming figures, the full extent of defaulted loans is yet to be realised, the governor said.
Earlier on February 11, Mansur warned that the NPL ratio could climb to 30聽 per cent of total outstanding loans by June 2025.
Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development, told 抖阴精品 that the amount of NPLs might rise further as loans previously concealed through data manipulation were now being exposed.
He criticised the Bangladesh Bank governor for failing to present a clear action plan to curb the crisis.
鈥榃e expected the accurate NPL data, but at the same time, we also expected strict measures to tackle this massive rise in defaulted loans,鈥� he said.
He warned that many banks would struggle to maintain the required provisions against such an enormous volume of NPLs, which would severely impact their operations, lending capacity and profitability.
He stressed that the Bangladesh Bank must take decisive action to recover defaulted loans and hold banks accountable for their failure to retrieve the funds.
In a press statement, the Bangladesh Bank said that the loan disbursement and renewal had declined, while the amount of defaulted loans surged due to the classification of major borrowers as defaulters and the non-payment of the rescheduled loans.
The surge in NPLs is not merely a result of economic stagnation or regulatory changes, it is a direct consequence of years of systemic corruption and political patronage.
Under the Awami League-led government, massive sums were siphoned off from banks in fake and fictitious names, with loans often reported as 鈥榬egular鈥� through data manipulation and lenient policies that allowed repeated rescheduling.
However, following the mass uprising that ousted the Awami League government, the actual scale of the financial mismanagement is coming to light.
Bankers and economists have alleged that some large business groups with close ties to the ousted AL government, including Beximco Group, Bashundhara Group, S Alam Group, Nasa Group and Orion Group, were the primary beneficiaries of these dubious practices.
These groups have now turned into defaulters, with their loans classified as non-performing.
Banks which were freed from the grip of controversial S Alam Group have started disclosing more accurate loan data.
Besides, many businesspeople with strong ties to the ousted government have either ceased operations or gone into hiding, leading to further repayment defaults.
When the Awami League came to power in 2009, the total NPLs stood at Tk 22,481 crore.
Over the next 15 years, this figure skyrocketed by Tk 3.22 lakh crore, a direct result of regulatory leniency, undue privileges extended to large borrowers and a lack of enforcement against defaulters.
Economists have said that a significant portion of these loans was laundered abroad, with the ultimate beneficiaries shielded by political connections.
They also observed that the recent political unrest and economic stagnation worsened the situation, making it difficult for many businesspeople to meet their repayment obligations.
The current surge in NPLs has exposed the deep-rooted rot in Bangladesh鈥檚 banking sector. Most of these defaulted loans were secured through political lobbying, financial influence and corrupt networks.
Experts are calling for a comprehensive audit of all loans to uncover the full extent of losses and identify the ultimate beneficiaries.
They stress that if written off loans, repeatedly rescheduled loans and legally disputed loans are considered, the actual volume of defaulted loans would be far higher than the reported figures.
