Experts associated with Bangladesh’s banking industry have observed that the country’s financial sector is becoming increasingly vulnerable due to years of irregularities, weak regulatory oversight, and leniency toward influential borrowers. According to various research reports, data from Bangladesh Bank, and sources within the sector, widespread irregularities in loan disbursement over the past decade have pushed several banks toward the risk of insolvency.

Record Surge in Default Loans

According to a recent report by Bangladesh Bank:

• As of September 2024, the total amount of loans disbursed by the banking sector stood at Tk 18 lakh crore.
• Of this amount, default loans reached Tk 6.44 lakh crore, accounting for 35.73% of total outstanding loans.

A year earlier, during the same period, default loans amounted to Tk 2.85 lakh crore, or 16.93% of total loans. This means defaulted loans increased by more than Tk 3.6 lakh crore within a single year.

According to Bangladesh Bank’s quarterly (Q1–Q2) report:

• The Non-Performing Loan (NPL) ratio was 12.2% in June 2023.
• By March 2024, the NPL ratio had risen sharply to 24.6%.

At the end of June 2024, total loans and advances in the banking sector stood at Tk 17.34 lakh crore, of which Tk 5.99 lakh crore had become defaulted loans. Within one year, default loans increased by Tk 3.88 lakh crore.

Officials from Bangladesh Bank have warned that when defaulted, written-off, rescheduled loans and pending legal cases are combined, the total volume of bad loans in the banking sector could soon exceed Tk 10 lakh crore.

At Least 12 Banks at Risk

According to several research organizations and banking sources, at least 12 banks are currently at risk of bankruptcy, while another 15 banks are struggling to survive.

As Bangladesh Bank has begun enforcing regulations more strictly, many previously “hidden” default loans are now being exposed.

One banking official stated:

“Many loans that were previously classified as regular were actually high-risk loans. Due to the new monitoring system, the real situation is now becoming visible.”

What Researchers Are Saying

Centre for Policy Dialogue (CPD) Distinguished Fellow Mustafizur Rahman said:

“The banking sector is now facing a severe crisis due to the enormous burden of default loans. Interest rates cannot be stabilized, and policy rates cannot be reduced. Entrepreneurs are being forced to borrow at high interest rates, which is discouraging investment.”

He further added:

“Transparency has increased in recent times. As a result, many loans that had previously been concealed are now coming to light.”

Allegations Against Major Business Groups

Various banking and private research reports have accused several industrial conglomerates of massive loan fraud and financial irregularities. Some notable allegations include:

S Alam Group

• Alleged embezzlement of Tk 2.25 lakh crore through fraudulent activities.
• Around Tk 1.25 lakh crore is alleged to have been laundered abroad.
• Default loans: Tk 40,000 crore.

Beximco Group

• Alleged loan irregularities involving Tk 53,000 crore.
• Default loans: Tk 20,516 crore.

Sikder Group

• Total loans: Tk 13,000 crore.
• Default loans: Tk 2,100 crore.

Nasa Group

• Outstanding unpaid loans: Tk 9,215 crore.

Orion Group

• Outstanding unpaid loans: Tk 10,000 crore.
• Default loans: Tk 1,500 crore.

Nabil Group

• Outstanding unpaid loans: Tk 9,405 crore.
• Default loans: Tk 7,000 crore.

Additional Allegations

Reports have also revealed large-scale loan irregularities involving a major Chattogram-based business conglomerate. According to sector insiders, such irregularities began increasing significantly after 2017, with the period from 2021 to 2023 being described as the “worst era of financial looting” in the banking sector.

According to Bangladesh Bank’s list, nearly 300 large and small institutions are currently linked to default loans.

Concluding Observations

Economists believe that massive loan defaults, weak governance, political influence, and relaxed regulatory oversight have pushed Bangladesh’s banking sector toward a prolonged crisis.

To restore stability, experts emphasize the urgent need for:

• Strict measures to recover defaulted loans,
• Reducing political interference in bank management,
• Effective legal action against those responsible,
• And restructuring banks that are at risk of insolvency.

Analysts warn that without immediate reforms, the crisis could pose serious long-term risks to Bangladesh’s overall economy.