Reza Mahmud :
Nearly 50 per cent of defaulted loans in Bangladesh’s financial sector are linked to the manufacturing industries, according to the latest data from Bangladesh Bank. Economists warn that non-performing loans have become one of the biggest burdens on the country’s banking system, with the leather, ready-made garments (RMG), textiles, shipbuilding, and shipbreaking industries among the hardest hit.
Bangladesh Bank’s Financial Stability Report shows that, by December 2024, banks had disbursed Tk 17,11,138 crore in loans, of which 20.25 per cent (Tk 3,46,547 crore) had become non-performing. Almost half of these defaulted loans – 49.43 per cent – are concentrated in the manufacturing sector, which also received the largest share of financing at 49.28 per cent.
Economists highlight that a significant portion of the defaulted funds were not invested in productive activities, but were allegedly laundered abroad. Professor Muinul Islam told The New Nation, “Many defaulters did not use the loans for industrial investment. Instead, the money was siphoned abroad after being obtained from banks and other financial institutions.” He added that recovering these funds will be extremely difficult.
Professor Islam also pointed to weak monitoring and lax lending policies during the previous Awami League administration as contributing factors. “Loans were disbursed without sufficient safeguards or oversight, creating long-term systemic risk,” he said.
Since Bangladesh Bank Governor Dr Ahsan H. Mansur assumed office, stricter reporting has revealed the true scale of defaults. Between January and June 2025 alone, defaults rose by Tk 1,94,453 crore, pushing the total to Tk 5,31,000 crore – over 27 per cent of all disbursed loans. By comparison, total defaults in 2009 were only Tk 22,482 crore.
Mutual Trust Bank Managing Director Syed Mahbubur Rahman cited economic stagnation, high inflation, declining sales, gas shortages, and the dollar crisis as factors that forced factories to operate at 30-50 per cent capacity. “Fraudulent borrowing also worsened the problem, as loans meant for manufacturing were sometimes misappropriated abroad,” he noted.
The RMG sector, the country’s leading export earner, has Tk 48,638 crore in non-performing loans, representing 25.83 per cent of its sectoral loans. The textile industry defaulted on Tk 36,520 crore (24.48 per cent), affected by declining export demand, unreliable domestic energy supply, and depreciation of the taka. Backward-linkage textile enterprises also suffered from rising import costs and energy shortages.
The crisis has had a direct impact on employment, as factories reduce output or close, while banks face liquidity constraints, limiting new lending. Experts emphasise that genuine entrepreneurs should be supported with loan rescheduling, while deliberate defaulters must face legal action. Transparency in lending, reliable energy, and smoother access to raw materials are crucial to reviving the sector.
BGMEA President Mahmud Hasan Khan described loan defaults as a “national issue,” noting that while legitimate businessmen maintain clean records, politically connected borrowers often misuse funds. Other manufacturing sub-sectors also face high defaults. Leather accounts for Tk 5,776 crore in non-performing loans (38.77 per cent), while shipbuilding and shipbreaking have defaults of Tk 8,031 crore (39.17 per cent). SMEs and cottage industries defaulted on Tk 16,259 crore (24.58 per cent). Pharmaceuticals are less affected, with Tk 1,618 crore (5.75 per cent) in defaults. Agro-based manufacturing and other large industries saw defaults of Tk 17,021 crore (14.31 per cent) and Tk 37,441 crore (14.56 per cent) respectively.
Outside manufacturing, trade and commerce hold 25.51 per cent of total defaults, services 12.52 per cent, consumer loans 2.41 per cent, and financial institutions and capital markets 8.01 per cent.
Experts warn that without technological upgrades, reliable energy supply, and disciplined lending practices, the manufacturing sector will continue to pose the greatest risk to the country’s financial stability.
