72pc of bad loans piled up in just 10 banks

Just 10 of Bangladesh’s 61 banks account for more than 72% of the country’s Tk6.07 lakh crore in non-performing loans (NPLs), exposing the extraordinary concentration of the banking sector’s bad-loan crisis in a small group of lenders.

The 10 banks had Tk4,39,527 crore in NPLs at the end of June, while total defaulted loans across the banking sector stood at Tk6,06,555 crore, according to the latest Bangladesh Bank data.

In other words, nearly three-quarters of all bad loans in the banking sector are concentrated in just one-sixth of the country’s banks.

The concentration comes as the overall volume of bad loans continues to rise rapidly. Sector-wide NPLs increased by Tk17,851 crore in just three months, from Tk5,88,704 crore at the end of March to Tk6,06,555 crore in June.

The latest figures underline that Bangladesh’s banking crisis is not affecting all lenders equally.

Instead, a handful of banks have emerged as major centres of financial stress after years of weak credit assessment, poor loan monitoring, irregularities, excessive exposure to large borrowers and failures to recover overdue loans.

Some banks have almost entirely lost their loan books
The severity of the problem becomes clearer when NPLs are measured against individual banks’ total loans.

First Security Islami Bank had the highest NPL ratio at 97.08% at the end of June.

Union Bank followed closely at 96.78%, meaning almost the entire loan portfolios of both banks were classified as non-performing. Social Islami Bank had an NPL ratio of 78.15%, while Exim Bank’s stood at 70.81%.

National Bank had an NPL ratio of 65.74%, while the ratios at IFIC Bank and AB Bank were 63.38% and 56.40%, respectively.

Among the major state-owned lenders, Janata Bank had an NPL ratio of 75.05%, while Agrani Bank’s stood at 43.98%.

The figures point to a particularly severe deterioration among several banks that have faced governance and asset-quality problems in recent years.

Islami Bank has the largest pile of bad loans In absolute terms, Islami Bank had the largest volume of NPLs in the sector, at Tk98,914 crore, equivalent to 52.15% of its total loans.

A significant portion of the bank’s bad loans is linked to S Alam Group.

The conglomerate took control of the bank in 2017, and loans associated with the group became a major source of concern following the fall of the Awami League government in 2024.

Janata Bank had the second-highest volume of NPLs, at Tk75,728 crore.

Beximco Group, associated with former prime minister Sheikh Hasina’s adviser Salman F Rahman, is among the bank’s largest defaulters. S Alam Group and AnonTex are also major borrowers with overdue loans at the lender.

Other banks among the worst affected have significant exposure to major business groups, including Beximco, Nassa Group and Sikder Group.

The concentration of lending among large corporate borrowers has raised concerns over whether banks adequately assessed repayment capacity and monitored how loan funds were used.

Tk6 lakh crore crisis reflects deeper asset-quality problems
The surge in NPLs is not a recent development.

Bangladesh Bank’s Financial Stability Report 2025 showed that the banking sector’s NPL ratio rose to 30.60% at the end of December 2025, from 20.20% a year earlier.

Bad loans then continued to increase during the first half of 2026, crossing the Tk6 lakh crore mark by June.

The latest deterioration is putting further pressure on banks to maintain adequate provisions against bad loans.

It is also weakening profitability and capital positions at already vulnerable lenders.

The World Bank has identified the banking sector as one of the country’s major economic risks.

In a report published in June, the multilateral lender said weak corporate governance, regulatory weaknesses and related-party lending had placed significant pressure on Bangladesh’s banking system.

The World Bank said Bangladesh’s NPL ratio was 32.6% at the end of March 2026, compared with a South Asian average of only 7.9%.

Repeated restructuring has failed to cure the problem
One of the biggest challenges for the authorities is that many problem loans have remained unresolved despite repeated rescheduling and restructuring.

A portion of large corporate loans has remained unpaid for years. Some loans that were previously rescheduled or restructured have eventually returned to the NPL category.

This suggests that changing repayment schedules has often delayed recognition of the underlying problem rather than restoring the borrower’s ability to repay.

A Bangladesh Bank executive director told The Business Standard that the crisis could not be solved simply by rescheduling or restructuring loans again.

The actual condition of long-overdue loans must first be determined, he said, followed by action against those responsible and effective measures for speedy recovery.

The official also stressed the need for banks to assess borrowers’ repayment capacity before approving fresh loans, monitor the use of loan proceeds and strengthen risk controls for large borrowers.

Ten banks now represent the sector’s biggest vulnerability
The concentration of NPLs means that restoring the health of these 10 banks will be crucial to stabilising the broader banking sector.

Bangladesh Bank has already begun identifying weak banks and taking measures aimed at reforming, merging and restructuring troubled lenders.

It has also strengthened supervision of credit management and loan recovery efforts and is assessing the quality of banks’ assets.
But the scale of the problem remains enormous.

The banking sector accounts for around 90% of the assets of Bangladesh’s overall financial sector, according to the World Bank.

Weakness at major banks can therefore affect the availability of credit, investment, business activity, employment and overall economic growth.

The Tk4.40 lakh crore held by just 10 banks shows where the immediate pressure is greatest.

For the wider banking sector, the challenge is no longer simply to prevent bad loans from rising.

It is to recover the huge stock of existing NPLs, hold those responsible for irregular lending accountable and ensure that fresh credit does not create another generation of problem loans.