United News of Bangladesh

Default loans in Bangladesh's banking sector have surged significantly, reaching Tk 6,44,515 crore at the end of September this year. This alarming figure represents 35.73 percent of the total disbursed loans. The increase is massive compared to the end of December 2024, when the volume of non-performing loans (NPLs) stood at Tk3,35,765 crore. This indicates that default loans have ballooned by Tk 2,98,750 crore over the nine-month period, although this is mainly due to the exposure of funds siphoned off under the previous government that are only now beginning to be included under the NPL category, as well as the adoption of stricter international standards in classifying loans. The development was confirmed by Shahriar Siddiqui, Director and Spokesperson for the Bangladesh Bank, to the media on Wednesday (November 26). Read more: Union Bank suffered Tk 26,000cr net loss in 2024 amid S. Alam Group scam Bangladesh Bank officials attribute the substantial increase to multiple factors: Exposure of Unaccounted Funds: Funds reportedly siphoned off from banks under various names during the tenure of the Awami League government are now beginning to be classified as non-performing. Adoption of International Standards: The country's adoption of international standards for classifying loan defaults is contributing to the rise in NPLs. Failure of Rescheduled Loans: Many loans that were previously restructured or rescheduled are failing to be repaid. Central Bank Intervention: The central bank has listed several irregular loans as defaults, further pushing up the NPL volume. According to data from the central bank, the total outstanding disbursed loan amount stood at Tk 18,03,840 crore at the end of September this year. Of this amount, the defaulted portion, as mentioned, is Tk 6,44,515 crore, which is 35.73 percent. Comparing year-over-year figures, default loans had reached Tk 2,84,977 crore at the end of September last year. This means that the total volume of non-performing loans has increased by a staggering Tk 3,59,718 crore over the past twelve months, for the factors mentioned above. Read more: Bangladesh shifts fiscal gears as bank debt falls

The interim government has reversed years of aggressive bank borrowing, opting instead to repay outstanding loans in a move economists said could unlock fresh credit for the private sector and cool inflationary pressures. The policy shift marks a clear departure from the previous administration, which had leaned heavily on bank financing to meet its fiscal needs, they said. In contrast, the new government has prioritised debt reduction, expenditure restraint and project rationalisation, a combination analysts describe as rare in the country’s recent fiscal history. “The country’s economic landscape has seen a notable change over the last year, as the interim government is repaying its outstanding loans to the banking system,” said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD). He said the administration’s approach is already forcing banks to reorient their portfolios towards the private sector after years of safe lending to the government. Mustafizur Rahman praised the decision not to take fresh bank loans this fiscal year while paying down legacy debt, calling it “a clear example of fiscal discipline” and a shift towards “a more responsible pattern of public expenditure”. Economist Abu Ahmed echoed that view, arguing that spending cuts – particularly on “highly ambitious and unnecessary” projects – had become essential to rebalance the credit market. Ahmed, who also chairs the Investment Corporation of Bangladesh (ICB), noted that government borrowing had previously crowded out private investment by drawing banks into low-risk lending to the public sector. Devt partners push govt for tougher tax measures amid debt pressure: NBR head “Banks got an opportunity to lend to the government, and they felt shy to invest in the private sector as there is a risk of recovery,” he said. Debt Reversal Data from the Bangladesh Bank shows a dramatic turnaround. Between July and October of FY2025–26, the government repaid Tk 503 crore to the banking system. During the same period last fiscal year, it had borrowed Tk 15,450 crore. The total net government debt with banks has also edged down. From Tk 5,50,904.96 crore at the end of June, it fell to Tk 5,50,401.65 crore by 30 October.On that day alone, repayment totalled nearly Tk 1,009 crore, including Tk 899 crore to the Bangladesh Bank and Tk 2,541 crore to scheduled banks, driven largely by clearance of short-term “Ways and Means Advance” obligations. Non-Bank Funding Rises The government has simultaneously strengthened its reliance on non-bank financing. Between July and October, it raised Tk 9,565.52 crore through treasury bills and bonds sold to non-bank financial institutions, insurers and individual investors. Excluding National Savings Certificates, total domestic borrowing from non-bank sources stands at Tk 9,062 crore. Economists say the fiscal tightening reflects a broader rethink of development spending. The interim government has cancelled or suspended numerous non-priority and non-profitable development projects, while slowing the pace of many others. IMF-WB proposes unified debt management office in Dhaka to strengthen public debt governance Insiders attribute the lower debt needed to this project screening, along with stricter revenue management. Former National Board of Revenue chairman Dr Muhammad Abdul Mazid said stronger-than-expected tax collection in the first quarter had also supported the government’s ability to repay loans. “This strong revenue position, combined with the government’s firm stance on expenditure control, has made it possible to repay debt instead of taking new loans,” he said. He said reduced government borrowing should ease inflationary pressure while expanding banks’ lending space to the private sector, a shift that could boost production and job creation. Risks Ahead Despite widespread praise for the government’s fiscal prudence, analysts warn that prolonged delays or cuts in development projects risk slowing investment and dragging on growth. For now, however, Bangladesh’s banking sector is preparing for a new era in which the government is no longer its largest and most reliable borrower – and the private sector may once again take centre stage in the credit market. Read more: Banking, power, revenue reforms in focus as govt faces IMF debt concerns: Salehuddin

Bangladesh's banking sector continues to be in ailing health, as new figures reveal a significant jump in classified loans, painting a challenging picture for the sector and the economy. As of March (quarter) 31, 2025, the gross rate of these "bad loans" has surged to 24.13 percent, a notable increase that could impact everything from credit availability to economic stability. This recent report indicates that across 61 scheduled banks, the total amount of classified loans hit a staggering Tk4,20,334.94 crore in the first quarter of 2025. This is a considerable jump from Tk3,45,764.86 crore just three months prior, in December (quarter) 2024. Merger of 5 Islamic banks at final stage: Bangladesh Bank Governor In simpler terms, the percentage of loans at risk has gone up by 3.93 percent in just one quarter. Looking back a year, the situation appears even more concerning, with the classified loan rate ballooning by 13.02 percent since March 2024, when it stood at 11.11 percent. The problem isn't just with the gross figures. When we look at "net classified loans" – after accounting for provisions and suspended interest – the rate also climbed to 15 percent by March 31, 2025, up from 10.57 percent in December 2024. This means a larger portion of the risky loans are not fully covered by the banks' reserves. Defaulted Loans See Sharp Rise A major component of these classified loans are "defaulted loans" – money that borrowers have failed to repay. This category alone amounted to Tk3,57,655.24 crore by the end of March 2025, representing 20.53 percent of all loans. This figure has surged by Tk 52,581.86 crore since December 2024, indicating that more borrowers are struggling to meet their obligations. Growing Provision Shortfall Banks are also facing a widening "provision shortfall," meaning they haven't set aside enough money to cover potential losses from these bad loans. This deficit grew to Tk1,70,655.32 crore in March 2025, a significant increase from Tk1,06,130.82 crore in December 2024. Consequently, the "provision coverage ratio," which measures how well banks are prepared for loan losses, has dropped sharply to 37.97 percent from 50.75 percent. This indicates that banks are becoming less insulated against potential future shocks. Where Are the Loans Hitting Hardest? The report also breaks down where these problematic loans are concentrated: State-owned commercial banks continue to bear the heaviest burden, with a staggering 45.79 percent of their loans classified as problematic. This is up from 42.83 percent just last quarter. Private commercial banks also saw a notable increase, with their classified loan rate rising to 20.16 percent from 15.60 percent. Even foreign banks and specialized banks experienced slight increases, though their overall percentages remain lower at 4.83 percent and 14.47 percent respectively. Why the Spike? Key Factors Identified The central bank's report points to several key reasons behind this worrying trend. Extended Loan Maturities: Changes in rules, specifically BRPD Circular No. 09/2024, which re-determined the maturity periods for term loans, may have played a role. Aggressive Classification: The Bangladesh Bank's inspection department has been classifying large loans of certain customers as "adverse," contributing to the increase. Non-Renewal of Loans: Many "current loans" are not being renewed, pushing them into the classified category. Missed Rescheduled Payments: Borrowers who had their loans rescheduled are failing to make timely installment payments. Interest on Bad Loans: Even loans already classified as adverse are still accruing interest, further inflating the total classified amount. These figures underscore the persistent challenges within Bangladesh's banking sector, signaling a need for continued vigilance and robust policy measures to stabilize the financial landscape.  

Banks will provide Tk433 crore loans to tannery owners for purchasing rawhide after Eid-ul-Azha, the highest rawhide collection season in the country. Of these loans, four state-owned banks (Sonali, Janata, Agrani and Rupali) will provide Tk 258 crore. Of which, Janata Bank Limited has set a target of providing the highest amount of Tk 120 crore. Last year, the same amount of loans were planned to be distributed, but finally Janata Bank disbursed Tk 40 crore only. Read: Govt hikes rawhide prices ahead of Eid According to Bangladesh Bank (BB), the tannery owners will get bank loans of Tk 433 crore to buy raw hides. A portion of this loan has already been disbursed, the central bank sources said. This year, Rupali Bank is giving loans of Tk 30 crore, Agrani Bank Tk 83 crore and Sonali Bank Tk 25 crore. After the disbursement of loans in the leather sector in the nineties, most of the loans were not repaid. As a result,the private banks have stopped giving loans for this sector due to non-repayment culture of tannery ownets. Read: Savar Tannery Estate: Guideline to be prepared over plot allocation Now all the four state-owned banks are lending more to buy raw-hide. Apart from this, a few private banks are giving a small amount of loans. Bank officials say there is a tendency among tannery traders to invest the loans money in other sectors. That is why they willingly become loan defaulters.

Borrowers can repay their bank loans until Aug. 31 as the central bank extended the deadline considering the Covid situation. The relaxation was announced Monday by a Bangladesh Bank circular. Alsoread: Banks to remain closed on Sunday during lockdown It said the measure of shifting the June 30 deadline was taken considering the negative impact of coronavirus on the country's economy. Those unable to repay their loan instalments by June 30,can do it until Aug. 31 on the basis of bank-client relation. In this case, their loans would not be classified if 50 of their loans’ payable instalment are paid,” it said, adding that other policies will remain applicable in case of calculating the loans, lease, interest on advances and profits while no penalty interest or extra fee will be charged. Also read: No easy bank loans, say jobless expatriates, but bank refutes allegations

Left jobless due to corona pandemic last year a helpless Nurul Azim Babu returned from Dubai to his home in Chottagram, his future dark and gloomy. The money he had saved from his six-year job as a driver exhausted soon forcing a desperate Babu to look for a new job or start a small business in Bangladesh. Read: No good news yet from Italy: FM about expats' return The job proved elusive and no business was coming his way as the father of three children had no capital. At this point Babu received a good news. The government announced a Tk. 700 crore package of incentives for the Bangladeshi expatriates like him who had to return home after losing jobs abroad due to Covid-19. As advised by a friend he went to the state-owned Prabashi Kallyan Bank and applied for a loan Tk 3 lakh. It did not take long for the helpless man to realize getting the loan was not going to be a cakewalk. “The first thing the bank asked me to do is to prove that I have an at least one-year-old running business in Bangladesh.” “Since I had no such business and no one to help me in this regard I did not qualify for the loan.” Haunted by his job loss and subsequent harassment at home a frustrated Babu wondered if the government offer has been “a kind of deception.” This is not only Babu’s tale. A good number of an estimated five lakh Bangladeshi returnee expatriates have echoed his frustration in interviews with this UNB correspondent. Read: Bahrain urged to take back Bangladeshi expats Consider the case of Sohag Hawlader, who returned from Lebanon after being fired from his work with his employer citing coronavirus woes. He said, "If an ordinary expatriate like me goes for a loan from PKB, they ask to submit trade license and signature of a businessman, signature of another government official as guarantee."   Sohag, who has his wife and a child continued: "They (PKB) are posting advertisement on Facebook and YouTube: it is very easy to get loan from the bank. There should have a limit to harassment. “My request to all expatriates is not to take a loan from them as they are insulting us,” said an angry Shohag. The PKB management strongly refutes the allegations. Zahidul Haq, managing director of  PKB told UNB that they are successfully disbursing their loan to the returnee migrants who wanted to start their new business or project in Bangladesh. “The Bank is trying its best to help the migrants in financing their businesses,” he said. He countered that many expatriates have understood the package as one-time charity, not a loan. "People want to take money from the bank as incentives, but not as loan. Those who are complaining don’t want to follow the procedure needed to get loan. We only sanction loan to the people who can really show a plan of business as our aim is to reintegrate them," he said. He mentioned that the bank has already disbursed almost TK250 crore to the 13000 migrants in last 11 months. The bank is still following up the applications who have failed to take the loan as “we will get another amount of TK390 crore from the government,” he said. Last year the government announced a Taka 700 crore fund for rehabilitation and re-employment of the jobless overseas workers. Read: 28,849 Bangladeshi expats to return home: FM It came as many Bangladeshis to the country after Covid-19-induced loss of overseas employment. The PKB says it has disbursed Tk250 crore to almost 13000 returnees until June 21 this year, covering only 2% of the returnee migrants. Yet there are outpouring of allegations from the affected expatriates. Tanjil Islam, a returnee, said, "I went to the Cox's Bazar branch of PKB six times, but did not get any loan.” “They (bank officials) came to my home and demanded money. I didn't pay and so they submitted the bad report about me." Another returnee from Saudi Arabia Muneer Islam said that the expatriate welfare and loan distribution is just a propaganda. They are charging the same interest rate like other commercial banks.” Is it an example on how a good government initiative fails to reach the intended beneficiaries. The government has created a low interest loan facility of Tk500 crore, while a Tk200 crore fund from the Wage Earners' Welfare Board was also formed. Loans for the returnee migrants are being distributed through the PKB. The PKB is giving Tk1-5 lakh loans at 4% interest to returnee migrants. Those who receive the reintegration loans will enjoy a grace period ranging from one month to one year before they start to repay the loans. A returnee can take a maximum of Tk2 lakh as loan without any collateral. According to a rapid study conducted by the Ovibashi Karmi Unnayan Programme (Okup) last year, around 80 per cent of the returnee migrant workers want to be reintegrated in Bangladesh. But apparently the number of loan receivers is still very poor. A survey by Brac Migration Programme has found that 47.23 per cent of 417 returnee migrants do not have any source of income now. The report says 52.77 per cent of the 417 respondents to the survey have somehow managed work. Of them, 24.19 per cent are working in agriculture, 22.33 per cent as day labourers, 35.35 per cent in small businesses and 17.67 per cent are working in other jobs. The survey was conducted in March-April to explore and analyse the socio-economic and psycho-social situation of returnee migrants after one year of their return home during the pandemic. In a similar survey conducted around the same time last year, Brac found 87 per cent of 558 returnee migrants did not have income opportunities, said Brac Migration Programme Head Shariful Hasan. Also, 28 per cent respondents said they have debts now. Of them, 61.95 per cent borrowed money after returning home, and 25.05 per cent had debts previously. Rights groups suggest the government increase budgetary allocation for the expatriates' welfare. They call for their inclusion into the government programmes and policies in response to the shock of the pandemic. Mentioning migrant workers' immense contribution to the country's economy, RMMRU Executive Director Prof CR Abrar said, "Many migrants have come back under very dire circumstances, and they have not been able to make ends meet.”      

Bangladesh Bank has suspended all kinds of interest on bank loans for from April 1 to May 31 as businesses have been hugely affected by coronavirus outbreak.   A circular issued by the central bank’s Banking Regulations and Policy Department (BRPD) to all banks of the country said the Bangladesh Bank has decided that interest on all kinds of bank loans have to be transferred as interest-less blocked.    “This blocked interest should not be realised from borrowers until further order and such kind of interest should not be transferred to the income of the banks,” said the Bangladesh Bank.