NPL crisis deepens as surge across 44 banks
Bangladesh’s banking sector witnessed a sharp rise in non-performing loans (NPLs) during the January-March quarter, with defaulted loans increasing at 44 of the country’s 61 scheduled banks despite a series of regulatory measures aimed at containing the problem.
According to Bangladesh Bank officials, the deterioration was widespread, affecting not only long-troubled institutions but also several banks previously regarded as financially strong and well-managed.
Central bank data shows that bad loans at the 44 affected banks rose by Tk31,487 crore within three months. As a result, total NPLs in the banking sector climbed to Tk5.88 lakh crore by the end of March, accounting for 32.26 percent of total outstanding loans. This compares with Tk5.57 lakh crore, or 30.60 percent of total loans, at the end of December.
Officials said part of the increase stemmed from the correction of previously understated figures.
Inspections conducted after the December quarter reportedly uncovered a significant volume of concealed defaulted loans, leading to revised reporting. At the same time, sluggish economic activity and weak business performance have made loan recovery increasingly difficult.
State-owned banks also recorded a further deterioration in asset quality. NPLs at the six government-owned banks increased by Tk3,677 crore to Tk1,49,785 crore, representing nearly 46 percent of their total loan portfolios. Four state-owned lenders reported higher defaults, with Janata Bank posting the largest increase. Its bad loans rose by Tk2,258 crore to Tk75,000 crore, equivalent to almost three-quarters of its outstanding loans. Rupali Bank, Agrani Bank and BASIC Bank also registered increases.
The private banking sector carried the largest share of the burden. Total NPLs among 43 private commercial banks rose by Tk26,903 crore to Tk4.16 lakh crore, accounting for more than 30 percent of their loan portfolios. Thirty-four private banks reported higher defaults. IFIC Bank recorded the sharpest increase, while significant rises were also reported by Islami Bank Bangladesh, EXIM Bank, United Commercial Bank, National Bank, Premier Bank and AB Bank.
Notably, several traditionally strong banks also experienced growing defaulted loans. City Bank, Prime Bank, Bank Asia, Uttara Bank and Standard Chartered Bank Bangladesh all reported increases, underscoring the mounting pressure across the banking industry.
Banking leaders attributed the worsening trend to a combination of factors, including economic slowdown, persistent inflation, high borrowing costs and weaker business cash flows. They also cited the expiry of loan repayment concessions introduced during challenging periods, stricter regulatory scrutiny that has exposed hidden defaults, and longstanding governance weaknesses in lending practices.
Some bankers further argued that political influence in credit decisions has encouraged willful defaults, making the challenge of restoring financial discipline even more difficult.
