Bangladesh Banks Face Massive 191,780 Crore BDT Deficit

The Bangladeshi banking sector is currently reeling under the immense pressure of high non-performing loans (NPLs), leaving many institutions financially crippled. As the burden of mandatory provisioning—funds set aside as a safety net against bad debt—intensifies, potential operating profits are effectively evaporating. By the close of December 2025, although the sector was projected to record earnings of roughly 441,091 crore BDT, a vast portion of this had to be diverted to cover these security reserves, preventing most banks from realising actual net profits.

The Widening Provisioning Gap

Despite the legal requirements, many banks have failed to maintain the prescribed rates of provisioning due to their deteriorating financial health. The latest official data reveals an aggregate provisioning shortfall of 191,780 crore BDT.

Under Bangladesh Bank regulations, the percentage of operating profit that must be set aside varies based on the quality of the loan:

• Unclassified (Regular) Loans: 0.5% to 5%

• Sub-standard Loans: 20%

• Doubtful Loans: 50%

• Bad or Loss Category Loans: 100%

A senior official from the central bank noted that systemic irregularities during the previous Awami League administration have left the sector unable to sustain these security reserves. With approximately one-third of all disbursed loans now classified as defaulted, some banks are struggling not just with profitability, but with the very preservation of their core capital.

Sector-Wise Provisioning Performance

The data indicates that while domestic banks are floundering, foreign commercial banks have managed to remain resilient, even maintaining a small surplus.

Economic Consequences and Future Outlook

Economists and researchers have warned that this “provisioning fatigue” poses a long-term threat to the nation’s financial architecture. M. Helal Ahmed Jony, a Research Fellow at Change Initiative, emphasised that such deficits negatively impact capital adequacy. This, in turn, restricts new lending, creates investment stagnation, and exerts significant pressure on the broader economy.

While there was a slight reduction in NPLs in the final quarter of 2025—down to 557,217 crore BDT (roughly 31% of total loans) from a September peak of over 644,000 crore BDT—the situation remains precarious. Analysts argue that previous “accounting tricks,” such as the 2019 directive that allowed a six-month grace period before a loan was officially termed “overdue,” have only served to mask the true extent of the decay.

The current existence of “paper profits” alongside a genuine liquidity crisis suggests that without a radical shift in recovery strategies and anti-corruption measures, the sector remains at high risk of a collapse in depositor confidence.