Business Report :
Bangladesh’s banking sector will require five to ten years to recover from the deepening non-performing loan (NPL) crisis, Bangladesh Bank Governor Ahsan H Mansur said Saturday.
Speaking at an economic conference organised by Bonik Barta at the Pan Pacific Sonargaon Dhaka, the governor said the sector is now seeing the true extent of bad loans due to the central bank’s stricter loan classification rules.
Mansur said that although official figures for years suggested that NPLs hovered around 8 percent, independent analyses revealed a far more alarming scenario.
“Two years ago, my estimate was that the sector’s NPL ratio would be around 25 percent.
But the latest figures show it has already reached 35 percent, and it could be slightly higher,” he said.
He warned that a default rate exceeding one-third of total loans poses a severe structural threat.
“This means banks are essentially operating with only two-thirds of their asset quality intact.
It’s not a small issue; it’s a structural risk that will continue to strain the sector,” the governor said.
Mansur stressed that the crisis cannot be resolved quickly. “We believe the NPL situation will stabilise around this level.
After that, it may start to decline gradually. But a full recovery will require five to ten years of sustained reform and discipline,” he noted.
He said that unless governance improves, high NPLs will continue to weigh heavily on lending capacity, investment flows, and overall financial stability.
Turning to the external sector, the governor expressed cautious optimism over the rising opening of letters of credit (LCs) for importing essentials ahead of Ramadan.
“Last year’s Ramadan was the most difficult period for managing foreign exchange liquidity. But this year, we are not seeing signs of stress,” he said.
According to Mansur, all import LCs for Ramadan essentials have already been opened, and LC openings across a broader range of products have increased significantly compared with the same period last year.
“Imports have increased, showing double-digit growth this month. Yet even then, there is no exchange rate pressure now,” he added.
Industry representatives, including AK Azad, managing director of Ha-Meem Group, and AK Enamul Haque, Director General of BIDS, also spoke at the event.
