BB clarifies NPL figures, rejects misleading ‘distressed loan’ calculations

The Bangladesh Bank has rejected recent media reports claiming that distressed loans in the country’s banking sector account for between 45per cent and 60per cent of total loans, saying the estimates are based on technically flawed calculations and do not reflect the actual condition of the sector.

In a clarification issued on Wednesday the central bank said the reported figures were inconsistent with the methodology used in its Financial Stability Report (FSR) 2025 and should not be treated as an accurate measure of banking sector risks.

According to the report, the official non-performing loan (NPL) ratio stood at 30.60per cent as of 31 December 2025. Bangladesh Bank said this audited and finalised figure remains the authoritative measure of the sector’s non-performing assets.

Bangladesh Bank said this audited and finalized figure remains the authoritative measure of the sector’s non-performing assets.

The central bank noted that some media reports had calculated so-called distressed loans by adding together classified or non-performing loans, rescheduled loans and written-off loans.

It described this method as an inappropriate and technically incorrect approach that led to inflated figures.

Bangladesh Bank further stated that there is no internationally recognized or standardized definition of “distressed loans” among global regulatory and policy-making institutions. While the term is often used to describe loans that are not generating income or are not being serviced regularly, the aggregate calculation used in the reports does not conform to accepted regulatory or accounting practices.

Explaining its position, the central bank said rescheduled loans cannot be considered distressed because borrowers continue to make repayments under approved restructuring arrangements. These loans remain active assets that generate cash flow for banks.

It also noted that written-off loans are maintained off-balance sheet in line with international practices and therefore cannot be added to active loan portfolios when assessing the current condition of the banking sector.

Bangladesh Bank warned that publication of unverified and technically inaccurate financial data could create negative perceptions about the country’s financial stability among domestic and international stakeholders, potentially affecting confidence in the economy.

The central bank urged media organisations to exercise greater caution in reporting financial sector data and to verify information with official sources to ensure accuracy and maintain public and investor confidence.