The defaulted loans of the banking sector surged to Tk5.31 lakh crore, of which approximately 1,200 defaulting business entities have appealed to the central bank for special consideration for loan rescheduling.
Bangladesh's banking sector is grappling with a dramatic surge in defaulted loans, a phenomenon largely attributed to irregularities involving businesses close to the former Awami League government, coupled with the country's ongoing economic downturn and new policy implementations.
This troubling trend is evident across nearly all banks, including both those that are strong and those that are struggling.
A recent report by the Bangladesh Bank has confirmed these alarming figures.
According to Bangladesh Bank data, the total amount of defaulted loans in the country's banking sector reached Tk 5.31 lakh crore by the end of June 2025, representing 27.09 percent of the total disbursed loans.
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This marks a significant increase from March 2024, when defaulted loans stood at Tk4.20 lakh crore, or 24.13 percent of the total.
Bangladesh Bank officials stated that loans disbursed under various names and anonymous entities during the Awami League government's tenure are now turning into defaults.
Stricter adherence to international standards for loan classification has also meant that many loans, previously renewable, are now being categorised as defaulted, thus revealing the true picture of the bad debt situation.
When the Awami League government took office in 2009, the volume of defaulted loans in the country was a mere Tkt 22,481 crore. Since then, this figure has consistently risen. According to economists, influential groups blessed by the former government engaged in various irregularities, siphoning off vast sums from banks, a significant portion of which was allegedly laundered abroad.
The extent of loan irregularities in five Shariah-based banks controlled by the controversial S. Alam Group of Chattogram, known for its close ties to the former government, is now being exposed.
Defaulted loans have rapidly escalated in these banks, including Islami Bank, First Security Islami Bank, Union Bank, Social Islami Bank, Global Islami Bank, and Exim Bank.
The average default rate in these banks has exceeded nearly 70 percent, prompting Bangladesh Bank to consider merging these five institutions.
Furthermore, defaulted loans are on the rise in most other banks, including state-owned Agrani Bank and Janata Bank, as well as private sector banks like IFIC, UCB, NRB, and NRB Commercial.
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Amid this crisis, approximately 1,200 defaulting business entities have appealed to the central bank for special consideration for loan rescheduling, with over a hundred already receiving such benefits. Banks are planning to offer special policy support, taking into account the prevailing circumstances.