United News of Bangladesh

Bangladesh’s banking sector, which should operate as the backbone of the economy, is struggling to regain its footing due to a profound lack of good governance and deepening financial instability. According to the latest review by Bangladesh Bank, 17 banks failed to generate any net profit in 2024, while 11 banks gave up spending under Corporate Social Responsibility (CSR) altogether in 2025. Experts view these as a clear sign of the dire state of the industry, fueled by skyrocketing non-performing loans (NPLs), weak boards, and political interference. Masrur Reaz, Chairman of Policy Exchange Bangladesh and former senior economist at the World Bank, told UNB that the financial health of some banks has revealed the worsening situation of the sector. He pointed out that these banks will take several years to return to a good financial position. At the same time, the strict policy regulations and skilled management are also required for these banks. Towfiqul Islam Khan, an economist and the Additional Research Director at the Centre for Policy Dialogue (CPD), said that the scenario was a reflection of the economy of Bangladesh. The banking sector is like the blood circulation in the financial sector; while banks are in trouble, the overall economy will not be vibrant, he said. Zero CSR Spending by 11 Banks: A recent central bank report on CSR activities revealed that 11 banks made no contributions to social welfare in 2025. These institutions include: Janata Bank, Agrani Bank, BASIC Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Bangladesh Commerce Bank, National Bank, Global Islami Bank, Padma Bank, Union Bank, and National Bank of Pakistan. While CSR funds are typically allocated to sectors like education, health, and climate change, the zero expenditure by these banks suggests they are too preoccupied with internal financial and administrative crises to fulfill their social obligations. Profitability Crisis: Meanwhile, the central bank's performance report for 2024 identifies 17 banks that failed to earn a net profit. The list comprises several state-owned and struggling private lenders: Janata Bank, Agrani Bank, BASIC Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, AB Bank, Bangladesh Commerce Bank, First Security Islami Bank, ICB Islamic Bank, IFIC Bank, National Bank, NRB Commercial Bank, Global Islami Bank, Padma Bank, Social Islami Bank, Union Bank, and National Bank of Pakistan. Analysts cite high NPLs, unearned interest income, rising operating costs, and irregularities in loan disbursement as the primary drivers of this unprofitability. Many of these banks are now facing such severe capital shortfalls that they struggle to maintain regular business operations. Interestingly, the report noted that six banks managed to contribute to CSR in 2025 despite recording no profits in 2024, likely by utilizing previous reserves—a move experts warn may challenge long-term stability. The crisis points toward systemic issues that have plagued the sector for years. The main challenges identified include: A significant portion of total loans is stuck with large borrowers who continue to enjoy new facilities without repayment. Political and influential interference in boardrooms often overrides commercial logic. Lack of profits has led to a sharp decline in Capital Adequacy Ratios (CAR). Also, reliance on manual systems and outdated software increases operational risks. Impact on the Economy: The fragility of the banking sector is casting a long shadow over the national economy. A weak banking system leads to reduced credit flow to industries, hindered investment, and slowed GDP growth. In 2025, the total CSR expenditure by the banking sector stood at Tk 345.05 crore, with Tk 98.44 crore going to education and Tk 85.64 crore to health. However, the fact that only a few strong banks carry the bulk of this expenditure highlights a massive disparity in financial health across the sector. Urgent Reforms Needed: The economists and industry insiders are calling for immediate intervention to stabilize the sector. Key recommendations include: 1. Strict Loan Recovery: Legal action against willful defaulters. 2. Board Accountability: Ensuring transparency and independence in bank management. 3. Digitalization: Modernizing risk management and banking software. 4. Policy Oversight: Strengthening CSR monitoring to ensure it remains a merit-based, profit-driven obligation. Without swift reformative steps, this deep-seated governance crisis and financial weakness pose a significant risk to the overall economic stability of Bangladesh.

Defaulted loans in Bangladesh’s banking sector stood at Tk 5.45 lakh crore at the end of 2025, Finance Minister Amir Khosru Mahmud Chowdhury told Parliament on Monday. “As of December 31, 2025, the total amount of defaulted loans in the banking sector is Tk 5,44,831 crore,” he said replying to a tabled question from NCP lawmaker Md Abul Hasnat who is popularly known as Hasnat Abdulla (Cumilla-4). The parliament session resumed at 3:30 pm with Deputy Speaker Barrister Kayser Kamal in the chair. The Minister also placed the list of top 20 loan defaulters in the House.   The 20 top loan defaulters are S. Alam Super Edible Oil Limited, S. Alam Vegetable Oil Limited, S. Alam Refined Suger Industries Limited, S. Alam Cold Rolled Steels Limited, Sonali Traders, Bangladesh Export Import Company Ltd, Global Trading Corporation Limited, Chemon Ispat Limited, S. Alam Trading Company Private Ltd, Infinite CR Strips Industries Limited, Keya Cosmetics Limited, Deshbandhu Sugar Mills Limited, Power Pac Mutiara Keranigonj Power Plant Ltd, Power Pac Mutiara Jamalpur Power Plant Ltd, Pacific Bangladesh Telecom Limited, Karnafuly Foods (Pvt.) Limited, Murad Enterprise, CLC Power Company Limited, Beximco Communications Limited, and Rongdhanu Builders (Pvt) Ltd. Highlighting government efforts to recover defaulted loans, the finance minister said banks with more than 10 percent classified loans will be reviewed quarterly and action plans will be adopted to identify and address obstacles to loan recovery. He said progress in recovering dues from the top 20 defaulters will be monitored at each bankers’ meeting organised by Bangladesh Bank and guidelines will be formulated for banks with high levels of classified loans. “Banks have been instructed to strengthen the existing legal team/law department of the bank,” said the minister. He said banks have been instructed to set a target of cash recovery of at least 1% of the defaulted loan balance of each bank by June 30, 2026 following Alternative Dispute Resolution (ADR). The finance minister said an action plan has also been adopted to resolve the problem of non-performing loans.  According to the action plan, Bangladesh Bank is currently working to amend the existing laws including Bank Company Act, Negotiable Instrument Act, Orthro Rin Adalat Ain and Bankruptcy Act to resolve the problem of non-performing loans. Other proposed measures include reviewing agricultural loan rescheduling policies, publishing lists of defaulters and wilful defaulters, strengthening incentives for regular borrowers, identifying good borrowers to promote a stronger credit culture, and setting borrowing limits across the banking sector, said the minister. Further steps include legal reforms to deal with wilful defaulters involving experienced bankers in money loan courts, preventing misuse of writ petitions to delay recovery, and enacting laws to establish private-sector Asset Management Companies (AMCs), he added. The minister also informed the House that loans taken from banks and financial institutions by members of parliament and their related entities amount to Tk 11,117.31 crore.  

The country’s banking sector remains under severe structural stress and meaningful reform cannot be achieved within a short time frame, said Finance Adviser Dr Salehuddin Ahmed said on Thursday. “The banking sector is definitely challenging. Institutions have been weakened, laws are often ignored and in many cases owners themselves control management, bypassing prudential norms,” he said while speaking at MTB-FE Roundtable on ‘Banking sector reforms’ at a city hotel. The adviser said the challenges facing the sector are deep, complex and institutionalized and the problems accumulated over the past 15 years cannot be fixed in 14 to 16 months. He said Bangladesh Bank has operational autonomy but full independence is neither realistic nor desirable without accountability. “No central bank can operate beyond the sovereignty of the state. Autonomy must go hand in hand with accountability,” he added. Referring to international assessments, the adviser cited recent global reports highlighting illicit financial flows, crime-related trade and inflation as key vulnerabilities for countries like Bangladesh. He said these issues directly affect the stability of the banking system and must be addressed primarily by the central bank with support from the finance ministry. The adviser also criticised the role of auditors, alleging that some chartered accounting firms had signed audit reports without proper verification. “This is an absurd reality. Auditors signing backdated or questionable reports severely undermine financial discipline,” he said adding that some firms have already been blacklisted. Irregularities are not limited to banks alone, mentioning that large financial activities in some sectors, including higher education often escape proper auditing, he added. The adviser said the government has recently passed amendments to the Negotiable Instruments Act and the House Building Finance Corporation Act, while work on amendments to money laundering laws and economic courts is ongoing. However, time constraints remain a major challenge, he said. “We have very limited time left but we are trying to complete as much as possible,” he said. The adviser acknowledged concerns over excessive numbers of senior officials at Bangladesh Bank and said steps have  already been taken to rationalise the structure. Despite the challenges, he said Bangladesh’s international image remains relatively positive. “Externally, the perception is not that Bangladesh is collapsing. But partners do say the situation is difficult,” he noted. The adviser said banking sector reform is unavoidable and critical for the economy. “This opportunity should not be wasted. If we cannot complete all reforms now, the next government must carry them forward. The banking sector is too important to delay,” he said. Bangladesh Bank Governor Dr. Ahsan H Mansur was present as the special guest while Professor of the Bangladesh Institute of Bank Management Dr. Shah Md. Ahsan Habib delivered the keynote speech.

Bangladesh’s banking sector is facing mounting pressure as non-performing loans (NPLs) have surged to alarming levels, raising concerns over the country’s  financial stability. The total volume of NPLs has crossed Tk 6.44 lakh crore which is about 35.7 percent of all outstanding loans in the banking sector, according to the latest editorial published in the October-December 2025 News Bulletin of the International Chamber of Commerce-Bangladesh (ICC Bangladesh). The figure is far higher than international benchmarks where NPL ratios in stable economies usually remain below 5 percent. Excessive NPLs weaken bank balance sheets, erode capital adequacy, curtail lending capacity, inflate borrowing costs, deter fresh investment, and pose grave risks to depositors and the wider macro-economy, the editorial It said the crisis has been partly exposed by recent regulatory directives from Bangladesh Bank, which have required banks to report defaulted loans more accurately, revealing long-standing weaknesses in the system. The editorial stressed the need to distinguish between wilful default and genuine business difficulties. Viable enterprises must receive structured support while wilful defaulters face firm and transparent action, it said. It called for a balanced approach to sustain economic momentum. Referring to global experience, the editorial underlined the importance of a strong and independent central bank to prevent systemic risks. Bangladesh Bank, which is responsible for monetary policy, prudential regulation, crisis management and oversight of payment systems, must function with transparency and professionalism to strengthen investor confidence and economic resilience, it added. Over the past two years, the central bank has taken emergency measures such as liquidity support, deposit guarantees and refinancing facilities to protect depositors during periods of financial stress. These steps are in line with international best practices, it noted. The editorial also highlighted the Bank Resolution Ordinance 2025 as a major reform initiative that provides a formal framework for resolving distressed banks. In a historic move, five Shariah-based banks were merged into a single state-owned entity, marking the largest financial consolidation in Bangladesh so far. The editorial cautioned that mergers involving publicly listed companies usually require shareholder approval under the Companies Act. While consolidation can address immediate threats, its long-term success will depend on strong supervision, improved governance and modern risk management systems, it said. Bangladesh, the editorial observed, is at a critical stage where the financial system is expected to support export diversification, expansion of cottage, micro, small and medium enterprises, technological innovation, climate-resilient investment and large infrastructure projects. Key recommendations include strengthening the autonomy of Bangladesh Bank to enforce discipline, taking firm action against wilful defaulters, improving bank governance and transparency, aligning with global risk standards, promoting responsible lending and building regulatory capacity. The goal is not only to avert crisis, but to build a trusted financial system that supports sustainable transformation at home and abroad, it said. ICC Bangladesh said it would continue working with all stakeholders to help build a stable, credible and globally respected financial system.  

International Monetary Fund (IMF) Managing Director Kristalina Georgieva on Tuesday praised the leadership of Prof Muhammad Yunus, crediting him for Bangladesh’s remarkable economic turnaround since assuming office as chief adviser of the interim government. Georgieva spoke with Prof Yunus over the phone from Washington, D.C., in the evening, said Chief Adviser’s Deputy Press Secretary Abul Kalam Azad Majumder. During their conversation, they discussed Bangladesh’s ongoing economic reforms, the regional landscape, and key challenges facing the country ahead of the general election scheduled for February. “I am impressed by what you have achieved,” said Georgieva, referring to the state of the economy when Professor Yunus assumed leadership in August last year. “You’ve done so much in such a short time. You took responsibility for your country when the risk of deterioration was very high. You are the right person at the right time,” she added. Georgieva particularly commended the stabilisation of the foreign exchange market and the recovery of foreign reserves following the government’s bold decision to introduce market-based exchange rate. Prof Yunus thanked the IMF managing director for her steadfast support during one of the most critical junctures in Bangladesh’s history. “Thank you for the wonderful support,” he said. He recalled their first meeting during the UN General Assembly in New York last year, noting that it played a pivotal role in fostering the country's path to economic recovery. US envoy Haas meets WB, IMF chiefs in Dhaka Reaffirming the interim government’s commitment to a timely and credible election, Prof Yunus stated that the polls would be held before the holy month of Ramadan in February. He reiterated that he would return to his previous work following the election. During their conversation, the IMF chief emphasised the importance of increasing domestic revenue and implementing bold reforms in the banking sector. “To be in a strong position, reform is inevitable. This is such a precious moment in the history of Bangladesh,” Georgieva said, urging the Chief Adviser to pursue deeper reforms in the months ahead. Prof Yunus outlined key measures already undertaken by his government, including restructuring efforts in the banking sector and initiatives to enhance revenue collection. “We inherited a devastated and completely broken economy. Some individuals literally stole money in bags from banks and fled the country,” he remarked. Govt won’t raise power tariff despite pressure from IMF: Energy Adviser The two leaders also discussed regional developments, including the ongoing youth uprising in Nepal and Bangladesh’s ambition to join ASEAN. Professor Yunus shared updates on Dhaka’s major infrastructure drive, including new port and terminal projects aimed at enhancing regional integration. Finance Adviser Saleh Uddin Ahmed and Finance Secretary Khairuzzaman Mozumder were present during the call.

The Asian Development Bank (ADB) on Thursday approved a $500 million policy-based loan to stabilise and reform the banking sector in Bangladesh by strengthening regulatory supervision, corporate governance, asset quality, and stability. The Stabilizing and Reforming the Banking Sector Program, Subprogram 1 will focus on policy reforms to promote finance sector resilience by enhancing banking sector governance, increasing the effectiveness of Bangladesh Bank’s liquidity management framework, and introducing immediate measures to resolve significant nonperforming loans in the banking system, according to a press release. The measures under the programme will support phased compliance with international banking norms, leading to integrity in asset quality information. ADB reaffirms robust support for Bangladesh’s reform drive, sustainable development The press release said that Bangladesh needs effective financial intermediation which can help business enterprises access credit and individuals obtain financial services from the banking sector. The banking sector has traditionally focused on industrial segments and creditworthy borrowers, with large sections of the population depending primarily on microfinance institutions.   Strengthening the banking sector, including digital infrastructure, will help provide longer-term financing sources and enable greater and cost-effective financial inclusion. ADB Principal Financial Sector Specialist Sanjeev Kaushik said the key binding constraints in the banking sector include a lack of robust asset quality, tight liquidity, and inadequate financial intermediation leading to low rates of financial inclusion. “The programme will bring significant value addition through building the regulator’s capacity for ensuring compliance with international norms, augmenting the capitalization of the banking sector and improving access to affordable finance for micro, small and medium enterprises.”  

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), increased by 33 points over the past week, but the banking sector failed to regain momentum despite the rise in the index. A weekly analysis of the DSE report reveals that during the five trading days, both the share prices and turnover in the banking sector declined. The prices of shares of the 36 listed banks dropped by an average of nearly 5%. Besides, turnover in the sector decreased by 8% compared to the previous week, reflecting waning investor interest. Previously regarded as a safe investment, the banking sector has been losing the trust of general investors due to a persistent decline in its performance. Over the past week, the number of shares traded in this sector dropped by 11.89%. Read: Stock market was neglected for 15 years: DSE Chairman Alongside this, most shares linked to S. Alam Group saw a downward trend throughout the week. Apart from banking, the financial institutions sector also experienced a significant decline, with share prices falling by 29.85% during the week.  

Islami Bank Bangladesh PLC has showcased remarkable resilience, achieving a 5% growth in deposits year-on-year as of December 2024. Despite challenges in the banking sector, the bank has firmly established its position as a trusted institution among depositors and investors. The financial statement of Islami Bank revealed deposits amounting to approximately Tk1.61 lakh crore in December 2024, compared to Tk1.54 lakh crore in December 2023. Investments also saw an increase, rising from Tk1.50 lakh crore in 2023 to Tk1.59 lakh crore in 2024. December 2024 proved to be a record-breaking month for remittances, with the bank receiving around Tk681,00 crore—approximately one-third of the country’s total remittances for the month. Islami Bank continues to lead the private sector in import and export finance, recording Tk648,00 crore in import financing and Tk324,00 crore in export financing for 2024. Currently serving 2.5 crore customers, the bank’s expansive network of 400 branches, 265 sub-branches, 2,800 agent banking outlets, and 3,000 ATM/CRM booths underscores its commitment to reaching every corner of the nation. A branch manager, speaking anonymously, assured, “Customers can withdraw money from branches without interruption. There are no complaints about liquidity issues, and cash transactions are operating normally.” Read: Islami Bank to issue new shares, sell S Alam Group's seized ones The bank’s RTGS (Real Time Gross Settlement) system has also remained fully operational, ensuring smooth and timely money transfers. Resilience Amid Challenges Despite the liquidity challenges faced by the banking sector in August 2024, Islami Bank has managed to recover swiftly. Governor of the Bangladesh Bank Dr Ahsan H Mansur recently commended the bank's important role in the country’s economy, stating, “Islami Bank is the number one bank in the country. It has turned around within the shortest time and is moving forward smoothly. This bank will not look back anymore.” Dr Shah Md. Ahsan Habib, a professor at the Bangladesh Institute of Bank Management (BIBM), attributed the bank’s resilience to its deep grassroots connections and the strong social networks of its employees. Read more: Islami Bank appoints 4 audit firms to investigate irregularities post S Alam Group takeover He highlighted the role of small depositors, saying, “In the context of Bangladesh, small depositors are the assets of a bank. Islami Bank, with its vast network, has successfully gained the trust of these depositors.” Leadership and Achievements Islami Bank’s Chairman, Md Obayed Ullah Al Masud, affirmed the institution’s consistent leadership in the private banking sector. He revealed that Bangladeshi expatriates remitted $26.89 billion in 2024, with Islami Bank facilitating 21.47% of this, equivalent to remittances from 163 countries. The top remittance-sending nations included Saudi Arabia, the USA, the UAE, Malaysia, Singapore, Qatar, Italy, and Kuwait. “Our 5% deposit growth in 2024 compared to 2023 is a testament to the confidence people have in us. Islami Bank will only continue to move forward,” Masud stated confidently. The bank’s contributions to the economy are vast, with investments in over 6,000 industries, support for 20 lakh entrepreneurs, and employment opportunities for 1 crore people. Read more: No restrictions on business operations and opening LCs in Islami Bank: BB Governor Besides, its small investment schemes have benefited 18 lakh marginal families, further cementing its role as a driver of socio-economic development. As the leading private sector bank in Bangladesh, Islami Bank’s robust performance, grassroots connections, and unwavering customer trust place it firmly on the path to continued success.

Bangladesh Bank Governor Dr Ahsan H Mansur said on Sunday that Bangladesh has made significant progress in the development of its financial sector though there have been numerous shortcomings that necessitate a thorough self-assessment. “The banking sector of Bangladesh has progressed a lot. There is no doubt about it. On the other hand, it must also be said that despite our achievements, there are many failures in terms of how far the banking sector could have progressed or how far the entire financial sector could have progressed,” he said. The central bank governor made this remark while inaugurating the Golden Jubilee Celebration of Bangladesh Institute of Bank Management (BIBM) in the city. He, however, said no single group or authority is responsible for the failures of this sector. “We all might have worked on it (this financial sector) differently from our own positions. We all might have worked with integrity. Maybe there was a deviation or not. We have to do this self-analysis.” Dr Mansur said the banks are not so much interested in financing some non-conventional sectors like SMEs and new sectors like climate financing and green financing. “Money has been given for many sectors but that money is not being transferred. Those who are running banks and financial institutions are not very enthusiastic about these sectors or are not willing to take risks. We need to change our mindset here.” He hoped that the financial institutions will play a stronger role in financing the non-conventional and new sectors. Dr Mansur, also the BIBM Governing Board Chairman, asked the BIBM to work on the banking sector’s new challenges like climate financing, green financing, developments in the financial sectors and technological innovations. Noting that such institutions are very necessary for the development of the banking sector, he said BIBM has been able to play an important role in building human resources in this sector  “To develop the financial sector, it is not possible without such training institutes,” he said. The Bangladesh Bank Governor asked the BIBM to pay attention to attract foreign students and spread its name and fame to the international arena. BIBM Director General Dr Md Akhtaruzzaman chaired the inaugural session, while Association of Bankers Bangladesh (ABB) Vice Chairman and City Bank Managing Director SM Mashrur Arefin, Chair of the Organising Committee Dr Shah Md Ahsan Habib and its member secretary Dr Mohammad Tazul Islam spoke on the occasion. BIBM is the national training, research, consultancy and education institute on banking and finance collectively owned by the Banking sector of the country.  Read: Bad loans in banking sector hits Tk6.75 lakh crore:  White Paper The Bangladesh Institute of Bank Management (BIBM) was established in 1974 with the primary objective of providing training to the officials of banks and financial institutions in Bangladesh, aimed at enhancing and updating their skills. Over the years, the institute has expanded its focus and now offers specialised training programmes for mid- and senior-level executives in the banking sector, further strengthening the leadership and management capabilities within the industry.

Bangladesh’s banking sector began to deteriorate in 2010 when the government introduced a single-digit 9 percent interest rate for lending, according to a White Paper. Titled “White Paper on the State of the Bangladesh Economy”, the report was unveiled at a press conference on Monday. As of last June, the total assets of banks in the financial sector stood at Tk 25.46 lakh crore, representing 47 percent of the country's gross domestic product (GDP). Bank deposits amounted to Tk 18.41 lakh crore, or 34 percent of GDP. White Paper prepared through inclusive, consultative process: Debapriya Between 2001 and 2019, GDP growth doubled, underlining the critical importance of private sector lending. However, the banking sector, which had been gradually strengthening, began to spiral out of control primarily after 2010. The report attributes this decline to temporary and hasty policy changes by regulatory agencies and the government, which resulted in misguided lending practices. Significant policy shifts included fixing the market-based interest rate at 9 percent, introducing the smart rate system, providing collateral-free loans during the Covid-19 pandemic, and adopting the crawling peg system in the foreign exchange rate regime. In April 2020, following discussions with private bank entrepreneurs, the then Finance Minister AHM Mustafa Kamal announced the 9 percent interest rate cap on bank loans. At that time, interest rates in the banking sector had reached as high as 22 percent. Excess capacity payments to exceed Tk 36,000 cr in 15 years: White Paper After entering into a loan agreement with the International Monetary Fund (IMF) early last year amidst a financial crisis, Bangladesh Bank gradually began increasing interest rates. The White Paper reveals that the fixed rate was, in effect, market-based only on paper. It also highlights a turning point in governance, when the Awami League government was ousted during the student-led public uprising on August 5, paving the way for an interim administration. Following the change in government, the leadership of financial regulatory agencies was overhauled. The implementation of IMF conditions and the elimination of previous policies commenced. To address the poor state of the financial sector, the central bank has raised its policy rate by 525 basis points since May 2022. White Paper: Debapriya focuses on 2-year economic plan The current policy rate stands at 10 percent, which is expected to help control inflation. The average lending rate in the banking sector is now around 12 percent, with some cases reaching 14 percent. Despite the introduction of a single-digit interest rate, the report reveals that most loans issued after 2010 have turned into defaults. The ratio of defaulted loans currently stands at 12.5 percent, amounting to Tk 2.85 lakh crore.