Khairul Alam: The banking sector in Bangladesh is facing a historic crisis as defaulted loans have surged to a record high. According to the latest data from Bangladesh Bank, non-performing loans (NPLs) reached Tk 6 lakh 44 thousand crore by the end of September this year. This staggering amount represents 35.73%—or roughly 36%—of the total loans distributed by banks.
Key Statistics:
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Total Defaulted Loans: Tk 6,44,000 crore (Sept 2024).
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One-Year Increase: Tk 3,59,718 crore.
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Three-Month Increase: Tk 36,170 crore.
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Total Outstanding Loans: Tk 18,03,840 crore.
Why the Sudden Spike?
Analysts attribute this explosion in bad debts to years of financial mismanagement during the previous Awami League regime. Influential circles allegedly looted banks using loans taken under false pretenses, which were never repaid. For over a decade, these defaults were hidden through “window dressing” to make accounts look regular. However, following the fall of the government on August 5, the true extent of the financial damage has started to surface.
Expert Opinions
Toufic Ahmed Choudhury, former Director General of BIBM, termed the situation “extremely alarming.” He warned that if immediate action is not taken, the default rate could hit 40%. He noted that stricter reporting standards by the central bank are now revealing the real figures.
Dr. Mainul Islam, former president of the Bangladesh Economic Association, emphasized the need for strict accountability. He urged the authorities to identify and punish those responsible for crippling the banking sector, stating that recovery is impossible without “courageous decisions.”
IMF Conditions vs. Reality
Bangladesh had promised the International Monetary Fund (IMF) to bring defaulted loans down to 10% for state banks and 5% for private banks as a condition for a $4.7 billion loan. Instead, the opposite has happened. Currently, defaulted loans in state-owned banks hover around 50%, while private banks are seeing rates near 20%.