The volume of classified loans in Bangladesh’s banking sector witnessed a significant decrease of Tk 87,298.33 crore during the final quarter of 2025.

As of December 31, 2025, total classified loans stood at Tk 5,57,216.92 crore, down from Tk 6,44,515.25 crore in September 2025.

According to a report by the Banking Regulation and Policy Department of Bangladesh Bank, the gross classified loan rate fell to 30.60 percent in December, compared to 35.73 percent at the end of September 2025.

However, on a year-on-year basis, the gross ratio remains significantly higher than the 20.20 percent recorded in December 2024.

Net Classified and Defaulted Loans:

The net classified loan rate, after adjusting for maintained provisions and suspense interest, dropped sharply to 13.93 percent in December from 26.40 percent in September. Meanwhile, specific defaulted loans totaled Tk 5,44,831.88 crore (29.92 percent of total loans), marking a decrease of Tk 68,039.57 crore over the three-month period of quarter-2.

Category-wise Performance The reduction in classified loans was observed across all bank categories:

State-owned Commercial Banks: The rate dropped to 44.44% from 49.65%.

Private Commercial Banks: Saw a decline to 28.25% from 33.75%.

Specialized Banks: Decreased to 39.74% from 41.95%.

Foreign Banks: Maintained the lowest rate at 4.51%.

Provision Shortfall and Credit Growth Despite the drop in bad debt, the banking sector continues to face a massive provision shortfall of Tk 1,91,441.35 crore.

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Total outstanding loans and advances in the 61 scheduled banks reached Tk 18,20,915.44 crore by the end of December 2025, reflecting an annual credit growth of 6.40 percent. Private commercial banks led this growth with a 7.56 percent increase in disbursements over the year.