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Bangladesh’s banks have done it again. They have achieved what many once thought impossible: a record-breaking six trillion taka in non-performing loans (NPLs). Yes, you read that right—six lakh crore taka in bad loans. If there were a World Cup for financial mismanagement, the banking sector would bring the trophy home every year.
According to the Bangladesh Bank’s latest Banking Sector Update, the NPL tsunami has grown so fast that even seasoned economists are running out of adjectives. In just three months, bad loans jumped by nearly 1.8 lakh crore taka. Over the past year—following political change—the number has more than tripled, pushing the national default rate to an eye-watering 35%.
But don’t panic—banks already have.
Islamic Banks Lead the “Hall of Shame”
If you thought Islamic banks were safer, think again. The report reveals that 55% of loans in Shariah-based banks are now in default. Out of these ten Islamic banks, six were controlled by the ever-mysterious S. Alam Group—whose financial acrobatics deserve their own Netflix series.
Not far behind are the state-owned banks, proudly reporting a 44% default rate. As always, they remain consistent—consistent in losing public money.
Foreign banks, meanwhile, continue staring at this circus from a distance, maintaining a default rate of just 6%—a number so low by local standards that it seems almost disrespectful.
A Political Earthquake Exposes the Skeletons
After the change in government, the central bank decided to stop pretending everything was fine. The old policy of “hide-the-defaults-and-hope-no-one-notices” has been abandoned, exposing the true extent of the crisis. The June quarter’s NPL data was delayed—not due to technical issues, but because the numbers were “too shocking to release on time.”
Even the IMF, known for its diplomatic language, was forced last week to drop the politeness and issue a rare public alarm, urging Bangladesh Bank to “fix this immediately.”
Generational Breakdown: Old or New—Everyone’s Broken
The report also ranks banks by generation.
4th-generation banks (2013 onwards): Leading the disaster with a 53% default rate.
Oldest banks (1972–1987): Holding steady at over 40%—decades of tradition preserved.
2nd- and 3rd-generation banks: Not wanting to be left behind, they proudly report 19% and 28% default rates respectively.
5th-generation banks (2016–2021): Surprisingly stable at 6%, possibly because they haven’t yet had the time to fully master the art of loan giveaways.
“Operation Cleanup”: Central Bank’s New Strategy—Forgive First, Ask Questions Later
To reduce the ballooning NPL numbers, Bangladesh Bank has undertaken a bold mission: make it easier than ever to reschedule or write off loans.
Only 2% down payment needed to get a 10-year loan rescheduling—the kind of offer that honest borrowers can only dream about.
The conditions for writing off loans have been relaxed—twice.
A loan can now be written off after giving the borrower a gentle 10-day advance notice, essentially saying: “We will erase your loan; please don’t disappear before we do.”
Earlier in the year, more than 400 institutions were given special rescheduling privileges after complaining they were “financially distressed”—a phrase that in Bangladesh often means “we’d prefer not to pay.”
The Bigger Picture: Investment Falls, Jobs Suffer, and Confidence Crumbles
With bad loans rising at warp speed, banks are increasingly reluctant to give out fresh loans. Investment is slowing, industries are shrinking, and job creation is suffocating. Economists warn that this is no longer just a banking problem—it’s an economic cancer.
And yet, the show goes on.
Bangladesh’s banking sector, it seems, has mastered the fine art of combining public money, private greed, and regulatory leniency into a system where borrowers don’t repay, banks don’t protest, and taxpayers ultimately foot the bill.
As the central bank races to clean up the mess before December, one can only hope that the next report will break fewer records—and fewer hearts.
But for now, the country watches as the six-trillion-taka NPL landmark stands tall, a monument to decades of unchecked privilege and financial indulgence.
