Defaulted loans double to a record Tk 6.44 lakh crore in a year

Defaulted loans in the banking sector rose further to Tk 6.44 lakh crore, or nearly 36 percent of total disbursed loans, at the end of September this year, showing Bangladesh Bank (BB) data released today.

The ratio of bad loans was 16.93 percent of total outstanding loans in September last year, meaning that the ratio of non-performing loans (NPL) doubled in a year. Since then, banks have been increasing their disbursements. It stood at 34.4 percent in June this year.

The ratio of net NPL also soared, and it stood at 26.4 percent as of September this year, up 1.32 percentage points from June this year. As a result, net NPLs stood at Tk 4.15 lakh crore, the data showed.

This is the highest bad loan ratio since 2000, exposing the fragile state of the banking system and renewing concerns about financial governance.

At the end of September, total disbursed loans stood at Tk 18.03 lakh crore, of which Tk 6.44 lakh crore became defaulted, amounting to 35.73 percent of all disbursed loans, BB data showed.

Bad loans were Tk 2.82 lakh crore at the end of September 2024, meaning defaulted loans increased by Tk 3.61 lakh crore in just one year.

The sharp rise in bad loans points to widespread irregularities, scams, and weak oversight throughout the 16-year Awami League regime, industry insiders said.

Due to the high volume of non-performing loans, the banking sector is facing a significant provision shortfall, which stood at Tk 3.44 lakh crore until September.