Non-performing loans (NPLs), long regarded as a chronic weakness in the country’s banking system, have surged to alarming levels in both trade and industrial sectors, raising serious concerns about investment prospects and overall economic stability. According to the latest report by Bangladesh Bank, the deterioration in asset quality has reached a point that could undermine financial sector resilience.
The central bank’s data reveal that by December 2025, the NPL ratio in the business and trade sector stood at a striking 42 per cent. This sector alone accounted for approximately Tk594,624.55 crore in loans, representing one-third of the total credit disbursed by banks. Such a high proportion of defaulted loans signals deep-rooted inefficiencies in credit assessment, monitoring, and recovery mechanisms.
Although there was a marginal improvement compared with September 2025—when total loans in the sector were recorded at Tk574,187 crore—the overall situation remains precarious. Financial analysts warn that even a slight reduction in the NPL ratio does little to offset the systemic risks posed by such a large volume of distressed assets.
A similarly concerning trend is evident in the industrial sector, which accounts for 43 per cent of total bank lending. By the end of December 2025, loans disbursed to industries reached Tk764,117 crore, of which 30.8 per cent had turned non-performing. While this marks a notable improvement from the 37 per cent NPL ratio recorded in September, the figure remains significantly high by international standards.
Sector-wise Loan and NPL Overview (December 2025)
| Sector | Total Loans (Tk crore) | Share of Total Lending | NPL Ratio (%) |
|---|---|---|---|
| Business & Trade | 594,624.55 | 33% | 42.0 |
| Industrial Sector | 764,117.00 | 43% | 30.8 |
Bankers attribute the rising volume of NPLs in the industrial sector to weak governance and political interference in lending decisions. In some cases, loans are allegedly obtained under false identities and subsequently siphoned abroad, with little prospect of recovery. Such practices not only erode bank capital but also undermine public confidence in the financial system.
Industrialists, however, point to external pressures. The lingering effects of the COVID-19 pandemic, including higher production costs and disrupted global supply chains, have significantly constrained cash flows. Many businesses have struggled to meet repayment schedules, resulting in a surge in loan defaults.
A senior executive at a private bank, speaking anonymously, warned that persistently high NPL levels could trigger a liquidity crunch across the banking sector. “New investments may stall, employment generation could slow, and banks may be forced to raise lending rates to offset rising risks,” he said. “In extreme cases, some institutions may face existential threats due to capital inadequacies.”
Experts agree that without decisive reforms—ranging from stricter loan appraisal to improved recovery frameworks—the growing burden of bad loans could severely impede the country’s economic growth trajectory in the coming years.