The recent revelation that non-performing loans (NPLs) in Bangladesh’s banking sector have surged to a staggering Tk 2,84,977 crore — approximately 17 per cent of total outstanding loans — should serve as a wake-up call for policymakers and stakeholders alike.
Our newspaper on Monday reported that this figure, the highest in the nation’s history, underscores a systemic crisis that has been brewing for years, exacerbated by governance failures and political interference.
Since the Bangladesh Awami League came to power in 2009, the amount of defaulted loans has increased nearly twelve-fold, from Tk 22,481 crore to the current alarming levels.
This dramatic rise is not merely a statistic; it reflects a broader malaise within the banking sector, where allegations of embezzlement and money laundering have become all too common.
Insiders have long claimed that substantial sums have been siphoned off under the guise of defaulted loans, often with political backing, raising serious questions about accountability and transparency.
The recent spike in NPLs can be attributed to a combination of international accounting practices and an economic slowdown that has hampered loan repayments.
The Bangladesh Bank’s decision to reduce the grace period for term loans from six months to three has also played a role in this surge.
However, critics argue that the real issue lies with large business conglomerates, many of which have close ties to the past ruling government, failing to meet their repayment obligations.
State-owned banks account for a significant portion of these defaulted loans, with Tk 1,26,111 crore, or 40.35 per cent of their disbursed loans, while private commercial banks report Tk 1,49,806 crore, or 11.88 per cent of total loans.
However, experts’ assertion that the actual volume of defaulted loans may exceed Tk 4 lakh crore raises further alarm.
With nearly half of this amount tied up in protracted legal disputes, the true extent of the crisis remains obscured.
As Bangladesh navigates these turbulent waters, we urge the government and regulatory bodies to prioritise reforms that enhance governance, accountability, and transparency in the banking sector.
Without decisive action the consequences of this burgeoning crisis could have far-reaching implications for the nation’s economy and financial stability.
Banking sector needs major overhaul now as the future of Bangladesh’s banking system depends on it.