Non-performing loans in the banking sector jumped to about Tk 6 lakh crore at the end of June, marking the sharpest quarterly rise on record and exposing the scale of hidden bad debts that have now come to light under stricter reporting and inspection by the central bank.
Bangladesh Bank data showed that defaulted loans rose by Tk 1.8 lakh crore in just three months from March, when the figure stood at Tk 4.2 lakh crore.
A year earlier, NPLs were Tk 2.11 lakh crore, or 12.56 per cent of total lending, indicating the amount has nearly tripled within twelve months and now accounts for 34.6 per cent of total Tk 17.34 lakh crore loan disbursements at the end of June this year.
Experts said that the surge reflects years of weak governance, political influence in lending and repeated rescheduling that kept large defaults off the books.
They said that non-performing loans accumulated during the previous government as politically connected borrowers received relaxed terms, avoided enforcement and benefited from extended restructuring windows.
The figure was only Tk 22,481 crore in 2009.
They also said that recent unrest and a sluggish economy also constrained borrowers鈥� cash flow, pushing more loans into overdue status.
Many businesses linked with the former ruling network have scaled down operations or stopped repayment altogether.
Bangladesh Bank tightened classification rules as part of reforms.
The default recognition period was reduced from 270 days to 180 days in September 2024 and then to 90 days in April this year, matching international practices.
Inspections also reclassified several large exposures after on-site audits.
The banking regulator reported that delayed renewal of revolving credit lines, unpaid instalments under earlier rescheduled loans and accumulated interest added to the rise.
State-owned banks remain the most stressed, with almost half of their loans now classified as non-performing.
In private banks, the share is about one-third, according to the latest breakdown.
BB officials said that the total could increase further as inspections continue and reporting discrepancies are corrected.
They noted that while new politically motivated lending has stopped, the system is still burdened by legacy defaults.
They suggested legal enforcement against wilful defaulters and proposed setting up a specialised asset recovery entity to manage distressed portfolios and speed up settlement.
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