The capital shortfall in 19 banks in Bangladesh soared to record Tk聽1,71,777 crore by the end of December 2024, marking the worst capital position in the country鈥檚 banking history.
After the political shift on August 5, a flood of previously masked non-performing loans (NPLs) has come to light, pushing many banks to the brink of collapse.
The Awami League government and its favoured business groups were repeatedly accused of engineering 鈥榳indow-dressing鈥� within bank balance sheets to conceal defaulted loans.
The Bangladesh Bank data shows that Janata Bank, a state-run institution, has emerged as the most critically distressed bank with its capital shortfall ballooning to Tk聽52,890.85 crore in December.
Its capital adequacy ratio (CRAR) plunged to a shocking negative 34.6 per cent, reflecting the severity of the bank鈥檚 erosion in capital base.
The situation at Janata illustrated years of unchecked loan irregularities, politically-backed lending, and chronic mismanagement.
Bangladesh Krishi Bank followed with a shortfall of Tk聽18,188.71 crore. Among other state-owned commercial banks, Rupali Bank (Tk聽5,192 crore), Agrani Bank (Tk聽4,686 crore), BASIC Bank (Tk聽3,156 crore), and Rajshahi Krishi Unnayan Bank (Tk聽2,470 crore) also posted severe capital deficits.
The crisis has taken a sharp toll on shariah-based banks as well. Of the 10 Islamic banks operating in the country, eight ended the year with substantial capital shortfalls.
Union Bank topped the list with a Tk聽15,689.67 crore shortfall, followed by First Security Islami Bank (Tk聽13,991 crore), Islami Bank Bangladesh Limited (Tk聽12,885 crore), and Social Islami Bank (Tk聽11,708 crore).
Other troubled Islamic banks include Global Islami Bank (Tk聽2,904 crore), ICB Islami Bank (Tk聽1,909 crore), Standard Bank (Tk聽1,862 crore), and Al-Arafah Islami Bank (Tk聽254 crore).
These banks, except ICB and Standard Bank, were controlled by controversial S Alam Group, which drained massive amount of loans from the banks through anonymous names.
In addition, IFIC Bank posted a shortfall of Tk聽9,029 crore, National Bank Tk聽7,798.64 crore, Padma Bank Tk聽4,985 crore, Bangladesh Commerce Bank Tk聽1,656 crore, and AB Bank Tk聽517.75 crore.
The explosion of NPLs 鈥� rising by Tk聽2 lakh crore in just one year to reach Tk聽3.45 lakh crore by December 2024 鈥� has forced banks to allocate significantly higher provisioning, further eroding their capital base.
Around 20 per cent of the banking sector鈥檚 total outstanding loans of Tk聽17.11 lakh crore are now classified as non-performing, the highest ratio in South Asia.
The overall capital to risk-weighted assets ratio (CRAR) in the banking sector fell to 3 per cent in December, far below the regulatory minimum of 10 per cent.
