Defaulted loans surge by Tk 314.87b in three months

Defaulted loans in Bangladesh’s banking sector rose by Tk 314.87 billion in the past three months, reaching nearly Tk 5.89 billion at the end of March, according to the latest report of Bangladesh Bank.

The central bank said that at the end of December, defaulted loans in the banking sector stood at over Tk 5.57 billion. By the end of March, within three months, the amount increased by Tk 314.87 billion. Although defaulted loans declined in the October–December quarter, they rose again in the following quarter.

According to the Bangladesh Bank report, total outstanding loans across 61 scheduled banks increased to nearly Tk 18.25 billion at the end of March. Loan disbursement rose by around Tk 40 billion over three months. At present, 32.26 per cent of total disbursed loans have been classified as defaulted.

State-owned banks have the highest rate of defaulted loans, with nearly 46 per cent of their disbursed loans classified as non-performing. However, compared to the previous quarter, defaulted loans in these banks declined in the January–March quarter. Overall, defaulted loans in these banks stood at about Tk 3.27 trillion.

Defaulted loans increased significantly during the previous Awami League government’s tenure. At the time the Awami League-led coalition government took office in January 2009, defaulted loans stood at Tk 224.81 billion. Before it left office in June 2024, the figure had risen to Tk over 2.11 trillion.

After the fall of the Awami League government, the interim government took charge. During its tenure, the actual picture of the banking sector began to emerge. At the same time, many borrowers linked to the Awami League reportedly became less visible in the public repayment system. As a result, defaulted loans increased sharply. In response, the interim government introduced special relaxation in loan rescheduling, which led to a temporary reduction in defaulted loans.

According to bankers, the sharp rise in defaulted loans over the 15 and a half years of the Awami League government was driven mainly by irregularities, fraud, deception, and high levels of corruption in the banking sector. Incidents involving groups such as S Alam Group, Beximco Group, Nassa Group, Biswas/Bismillah Group, Hall-Mark Group, as well as scandals in banks like National Bank, Islami Bank, and BASIC Bank, significantly contributed to the increase in classified loans.