Saturday, 12 July, 2025
Bangladesh Bank Governor Ahsan H Mansur has revealed that non-performing loans (NPLs) have surpassed Tk 3 trillion for the first time in the country’s history, warning that the figure is likely to rise further, ringing alarm bells across the banking sector.
Speaking at a press conference at the central bank on Wednesday, the central bank governor attributed the increase to a regulatory change that reduced the loan classification period from 180 days to 90 days, making it harder for banks to delay recognizing bad loans.
Mansur pointed out that state-owned banks hold the highest volume of NPLs, citing weak governance and politically driven lending under the previous government as key factors.
“The big concern is that deposits are not increasing sufficiently,” he said. “To improve the situation, we must restore public confidence in the banking sector. Strengthening the balance of payments and reserves will also help.”
Referring to the latest data for October–December 2024, he noted that total disbursed loans stood at Tk 17.11 trillion, with NPLs reaching Tk 3.46 trillion.
The surge in bad loans is raising alarm across the banking sector, as mounting defaulted assets erode bank profits and restrict credit flow to the private sector, a key driver of economic growth.
According to banking sources, NPLs surged by Tk 607.87 billion in just three months, pushing the total to an unprecedented level. Over the past year, the increase has been even more dramatic—Tk 2.13 trillion, with Tk 1.39 trillion added in just six months.
Bangladesh Bank data shows that as of December 2024, NPLs accounted for 20.20% of total loans, a sharp rise from previous figures, which were previously underreported at just 9%.
Compared to the previous quarter, NPLs increased by Tk 740 billion, reaching Tk 2.85 trillion by the end of September, when they made up 16.93% of total loans. The latest data shows that NPLs jumped by 21.33% in the October–December period alone.
A historical comparison highlights the staggering growth: in December 2023, total NPLs stood at Tk 1.46 trillion, meaning the sector has seen a 137% rise in just one year.
State-owned banks remain the most affected, with NPLs rising from 40.35% of total loans in September to 42.83% by December.
Following the ouster of the Awami League government on August 5, the central bank initiated banking sector reforms, including stricter classification of overdue loans and an end to the rescheduling of bad loans for major borrowers. Many analysts expect these changes to lead to a further rise in officially recorded NPLs as previously concealed bad loans come to light.
Toufic Ahmad Choudhury, former Director-General of the Bangladesh Institute of Bank Management (BIBM), said the actual scale of NPLs had long been underreported.
“NPLs were already much higher than officially stated during the previous government’s tenure,” he said. “Many defaulted loans were not classified as non-performing due to regulatory leniency and special benefits for defaulters. Now, with a stricter classification system, the true state of the banking sector is becoming visible.”
The growing NPL crisis poses a major threat to financial stability, raising concerns about liquidity constraints, investor confidence, and future lending capacity. As Bangladesh grapples with these challenges, restoring trust in the banking sector remains critical.
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Bangladesh Bank Governor Ahsan H Mansur has revealed that non-performing loans (NPLs) have surpassed Tk 3 trillion for the first time in the country’s history, warning that the figure is likely to rise further, ringing alarm bells across the banking sector.
Speaking at a press conference at the central bank on Wednesday, the central bank governor attributed the increase to a regulatory change that reduced the loan classification period from 180 days to 90 days, making it harder for banks to delay recognizing bad loans.
Mansur pointed out that state-owned banks hold the highest volume of NPLs, citing weak governance and politically driven lending under the previous government as key factors.
“The big concern is that deposits are not increasing sufficiently,” he said. “To improve the situation, we must restore public confidence in the banking sector. Strengthening the balance of payments and reserves will also help.”
Referring to the latest data for October–December 2024, he noted that total disbursed loans stood at Tk 17.11 trillion, with NPLs reaching Tk 3.46 trillion.
The surge in bad loans is raising alarm across the banking sector, as mounting defaulted assets erode bank profits and restrict credit flow to the private sector, a key driver of economic growth.
According to banking sources, NPLs surged by Tk 607.87 billion in just three months, pushing the total to an unprecedented level. Over the past year, the increase has been even more dramatic—Tk 2.13 trillion, with Tk 1.39 trillion added in just six months.
Bangladesh Bank data shows that as of December 2024, NPLs accounted for 20.20% of total loans, a sharp rise from previous figures, which were previously underreported at just 9%.
Compared to the previous quarter, NPLs increased by Tk 740 billion, reaching Tk 2.85 trillion by the end of September, when they made up 16.93% of total loans. The latest data shows that NPLs jumped by 21.33% in the October–December period alone.
A historical comparison highlights the staggering growth: in December 2023, total NPLs stood at Tk 1.46 trillion, meaning the sector has seen a 137% rise in just one year.
State-owned banks remain the most affected, with NPLs rising from 40.35% of total loans in September to 42.83% by December.
Following the ouster of the Awami League government on August 5, the central bank initiated banking sector reforms, including stricter classification of overdue loans and an end to the rescheduling of bad loans for major borrowers. Many analysts expect these changes to lead to a further rise in officially recorded NPLs as previously concealed bad loans come to light.
Toufic Ahmad Choudhury, former Director-General of the Bangladesh Institute of Bank Management (BIBM), said the actual scale of NPLs had long been underreported.
“NPLs were already much higher than officially stated during the previous government’s tenure,” he said. “Many defaulted loans were not classified as non-performing due to regulatory leniency and special benefits for defaulters. Now, with a stricter classification system, the true state of the banking sector is becoming visible.”
The growing NPL crisis poses a major threat to financial stability, raising concerns about liquidity constraints, investor confidence, and future lending capacity. As Bangladesh grapples with these challenges, restoring trust in the banking sector remains critical.
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