Substantial Rise in Defaulted Debt Across 44 Banks

Despite a sequence of regulatory concessions implemented by the authorities to curb the expansion of non-performing loans (NPLs), defaulted debt has escalated across 44 of the country’s 61 scheduled banks during the January–March quarter. According to senior officials at the central bank, Bangladesh Bank, this widespread fiscal deterioration represents an unprecedented contraction in asset quality across the domestic banking sector.

Significantly, the upward trajectory of toxic debt was not restricted to chronically distressed financial institutions. Several of the sector’s most capital-sound and financially stable institutions—including City Bank, Prime Bank, Bank Asia, Uttara Bank, and the foreign-owned Standard Chartered Bank Bangladesh—simultaneously registered notable increases in their defaulted asset portfolios.

Sector-Wide Escalation and Aggregate Metrics

In the space of three months, the collective volume of non-performing loans across the 44 affected banking institutions rose by an aggregate sum of Tk31,487 crore. On a macro level, the total volume of defaulted loans across the entire banking system reached Tk5.88 lakh crore by the conclusion of March, representing 32.26% of the total outstanding loans in the country. This indicates a sharp increase from the end of December, when sector-wide NPLs stood at Tk5.57 lakh crore, or 30.60% of total loan allocations.

Central bank inspectors attributed this sharp rise primarily to the uncovering of previously understated or concealed defaulted debts from the December quarter, which necessitated retrospective upward revisions. Furthermore, persistent macroeconomic stress has severely impaired loan recovery mechanisms across all institutional tiers.

Breakdown of Institutional Strains

The asset deterioration has profoundly impacted both public sector lenders and private commercial institutions. The detailed financial shifts within the different banking segments are structured in the tables below:

State-Owned and Specialized Portfolios

Within the six state-owned commercial banks, collective NPLs grew by Tk3,677 crore to reach a total of Tk1,49,785 crore, accounting for 45.85% of their combined advances. Four of these public lenders suffered distinct deteriorations, driven heavily by Janata Bank, where NPLs increased by Tk2,258 crore to reach Tk75,000 crore—amounting to approximately 74% of its entire loan portfolio.

Beyond commercial entities, specialised state institutions also felt the fiscal strain: Bangladesh Krishi Bank recorded an NPL rise of Tk396 crore, Rajshahi Krishi Unnayan Bank increased by Tk199 crore, and Probashi Kallyan Bank reported a rise of Tk34 crore.

Private and Foreign Commercial Banks

The private commercial banking segment bore the heaviest financial burden during the quarter. Aggregate NPLs across 43 private banks surged by Tk26,903 crore to a total of Tk4,16,000 crore, comprising 30.11% of their total outstanding credit lines. Out of these, 34 private institutions experienced a rise in toxic debt.

Executive Insights and Analytical Assessment

Prominent banking executives have identified structural macro-pressures and governance deficiencies as the core drivers of this asset devaluation.

Syed Mahbubur Rahman, the managing director and chief executive officer of Mutual Trust Bank, noted that domestic economic stagnation has stifled commercial expansion and greatly restricted the repayment capacities of corporate entities. He observed that large-scale corporate borrowers are increasingly dependent on central bank policy interventions to defer defaults.

Furthermore, Md Touhidul Alam Khan, the managing director and chief executive officer of NRBC Bank, outlined five critical factors accelerating the accumulation of non-performing loans across the sector:

“Stricter regulatory oversight is forcing previously concealed defaulted accounts to the surface, whilst the expiration of temporary moratoriums and deferred repayment facilities has mandated the formal reclassification of stressed debts.

Simultaneously, high inflation, escalating borrowing costs, and structural disruptions to international trade have heavily compressed corporate cash flows. These issues are exacerbated by systemic governance failures in loan underwriting, faulty collateral appraisals, and political interference in credit disbursement, which collectively sustain a culture of wilful default among elite borrowers.”

— Md Touhidul Alam Khan, Managing Director and CEO of NRBC Bank