Decades of debt evasion demand accountability to protect the banking sector

The latest data released by Bangladesh Bank paints a deeply troubling picture of the nation’s banking sector. Non-performing loans (NPLs) have surged to a record Tk 420,335 crore as of March 2025 — a staggering 24.13 per cent of all outstanding loans.

Our newspaper on Monday reported that this marks a year-on-year increase of 131 per cent and raises urgent questions about the structural integrity of the country’s financial institutions.

The recent adoption of international standards in loan classification by the central bank, while commendable, has only unveiled what many feared: a banking system long plagued by opacity, political patronage, and weak governance.

For years, successive governments—particularly the previous Awami League administration—have been accused of fostering a culture in which well-connected individuals could secure massive loans under lenient terms, often with little intention of repayment.

Since the political transition in August 2024, the central bank has sought to overhaul its operations. But the full extent of past mismanagement is now becoming visible.

The fact that NPLs have risen by Tk 74,570 crore in just one quarter underscores both the severity of the problem and the overdue nature of reform.

The Centre for Policy Dialogue (CPD) earlier estimated that Tk 92,261 crore was misappropriated in 24 major scams during the Awami League’s tenure — a sum equivalent to 12 per cent of the national budget for FY2024.

Economist Professor Muinul Islam’s assessment is even more alarming: he suggests total distressed assets may exceed Tk 700,000 crore when rescheduled, written-off, and legally entangled loans are considered.

That would mean nearly 40 per cent of the total loan portfolio is no longer performing—a dire prognosis for financial stability.

This is more than a matter of numbers. The crisis represents a collapse in accountability and public trust.

A banking system that rewards political connections over creditworthiness is not only unsustainable — it is dangerous. Without swift and sweeping reforms, the banking sector risks becoming a systemic threat to the entire economy.

The government must act decisively to restore transparency, strengthen regulatory oversight, and prosecute those responsible for defrauding the nation. Anything less would betray the public’s trust and jeopardise future growth.

Bangladesh’s economic future depends on a banking sector that serves the many, not the privileged few.