85% of default loans concentrated in just 15 banks

Fifteen of the country’s 61 banks accounted for as much as 85 percent of defaulted loans as of March, according to central bank data, highlighting how loan irregularities, fraud and financial scams have become concentrated in a small group of commercial lenders.

Combined non-performing loans (NPLs) in these banks stood at more than Tk 4.99 lakh crore, out of total classified loans of around Tk 5.88 lakh crore across the banking sector, according to Bangladesh Bank (BB) data.

The stressed lenders are Agrani Bank, Janata Bank, Rupali Bank, Sonali Bank, AB Bank, Exim Bank, First Security Islami Bank, Global Islami Bank, Social Islami Bank, Union Bank, Islami Bank Bangladesh, IFIC Bank, National Bank, Padma Bank and Bangladesh Krishi Bank.

They were selected based on both the volume and ratio of defaulted loans.

In terms of volume, Islami Bank Bangladesh has the highest NPLs at Tk 95,629 crore, equivalent to 50.88 percent of its total loans.

The bank was taken over by the S Alam Group in 2017. The controversial conglomerate later extended around 80 percent of the bank’s total loans to its own companies and associated firms, violating banking rules and regulations.

After the fall of the Awami League-led government in August 2024, the bank was freed from the group’s control and is now running under the supervision of BB through a board of independent directors.

The country’s largest shariah-based bank is now facing fresh uncertainty over the appointment of a new chairman.

“A large share of its defaulted loans is linked to the S Alam Group, with recovery remaining minimal,” said Md Altaf Hossain, acting managing director of the bank.

He told The Daily Star that the bank is trying to recover loans from other borrowers, but progress has been limited as even regular customers have become reluctant to repay.

“Under the current circumstances, the bank is prioritising the prevention of deposit withdrawals, while loan recovery efforts have received less attention,” he added.

At Exim Bank, bad loans stood at Tk 36,724 crore in March, representing 68.58 percent of total loans.

The bank was largely influenced by Nazrul Islam Mazumder, chairman of Nassa Group and former chairman of the Bangladesh Association of Banks (BAB). Loan irregularities and weak corporate governance have pushed the lender into a merger process with four other troubled banks.

Among lenders linked to the S Alam Group, First Security Islami Bank reported NPLs of Tk 60,843 crore, or 97.39 percent of total loans.

Global Islami Bank’s NPLs stood at Tk 14,243 crore, or 97.47 percent, while Social Islami Bank reported NPLs of Tk 30,439 crore, or 80 percent. Union Bank recorded NPLs of Tk 27,102 crore, or 97 percent of its loan portfolio.

These banks were heavily influenced by the S Alam Group, which secured a large portion of loans from them.

AB Bank’s NPLs stood at Tk 19,506.79 crore, accounting for 54 percent of total loans, while National Bank reported Tk 24,305 crore, or 57 percent.

Both lenders faced loan irregularities, governance failures and financial scandals during the Awami League government.

IFIC Bank was dominated by Salman F Rahman, vice-chairman of Beximco Group and an influential adviser to ousted prime minister Sheikh Hasina. Its bad loans stood at Tk 28,174 crore in March, equivalent to 63.36 percent of total loans.

Md Mehmood Husain, independent director and current chairman of the bank, said the volume of defaulted loans has not increased significantly, although the ratio has risen.

“We are trying to bring it down. The increase in the ratio of bad loans is mainly due to the lack of loan growth; in fact, the overall loan portfolio is shrinking, which has pushed up the proportion of non-performing loans,” he said.

He added that the ratio is expected to ease somewhat by the end of June, with efforts focused on reducing losses.

At crisis-hit Padma Bank, bad loans stood at Tk 5,026 crore, representing 91 percent of total loans.

Among state-owned lenders, Janata Bank reported the highest volume of bad loans at Tk 74,996 crore, or 67.4 percent of its portfolio. Agrani Bank’s NPLs stood at Tk 28,899 crore, or 40 percent, while Rupali Bank reported Tk 20,319 crore, or 43.37 percent. Sonali Bank recorded Tk 16,242 crore, equivalent to 17.85 percent.

NPLs at Bangladesh Krishi Bank stood at Tk 17,102 crore, or 47 percent of total loans.