Nearly 39 per cent of rescheduled loans have slipped back into default, exposing the ineffectiveness of repeated rescheduling as a tool for reducing non-performing loans.
Bangladesh Bank鈥檚 Financial Stability Report 2024 shows that outstanding rescheduled loans stood at Tk聽3,48,461 crore by the end of 2024, of which Tk 85,679 crore was rescheduled during the year.
Out of the total, Tk 1,33,872 crore or 38.5 per cent turned default again, up sharply from Tk 54,060 crore or 18 per cent at the end of 2023.
The report highlighted how repeated rescheduling has failed to prevent loans from turning non-performing again, raising concerns over the effectiveness of such measures.
It pointed to the mounting risks in the banking sector, where rescheduling has become a way to delay recognition of NPL rather than resolve them.
Experts said a massive amount of non-performing loans surfaced after Bangladesh Bank began exposing the actual health of banks following the fall of the Awami League regime, under which politically connected borrowers had enjoyed undue privileges and regulatory leniency.
NPL soared from Tk 1.45 lakh crore in December 2023 to Tk 2.11 lakh crore by June 2024 and further to Tk 3.45 lakh crore by December 2024.
Bankers said the sharp deterioration in loan quality pushed many banks to aggressively reschedule loans in order to polish their balance sheets before year-end.
More than half of the Tk 85,679 crore rescheduled in 2024 took place between October and December.
Since July 2022, banks have held full authority to reschedule defaults without prior central bank approval, a shift that, according to bankers, allowed politically connected boards to influence decisions.
They said that a key driver behind the rescheduling spree in 2023 was the further relaxation of rules ahead of the January 2024 general elections, permitting minimal down payments and extended repayment periods.
It enabled many large borrowers to avoid identification as defaulter that would otherwise disqualify them from contesting the polls.
In 2023 alone, banks rescheduled a record Tk 91,221 crore, most of it in the pre-election quarter. In comparison, Tk 63,720 crore was rescheduled in 2022.
Under a Bangladesh Bank circular, loans could be rescheduled repeatedly with down payments as low as 2.5 per cent and repayment periods stretching up to 29 years 鈥� far beyond global standards.
The rapid surge in 2024 reflects both regulatory leniency and growing stress across the sector.
Analysts argued that the practice of repeated rescheduling has deepened structural weaknesses, allowing habitual defaulters to exploit loopholes while banks continue to carry distressed assets on paper as regular.
They said that unless enforcement is tightened and genuine recovery pursued, rescheduling will remain a cosmetic measure 鈥� masking, rather than resolving, the banking sector鈥檚 default crisis.
