Banks rescheduled Tk 35,850 crore in defaulted loans during October-December period of 2024, with over 98 per cent of the rescheduling done by private banks.
According to Bangladesh Bank data, private banks rescheduled Tk聽35,244 crore, while state-owned banks accounted for Tk 327.48 crore and specialised banks Tk聽277.9 crore.
Over the entire year of 2024, banks rescheduled Tk聽56,582 crore in defaulted loans 鈥� 9.86 per cent down from Tk 62,582 crore in 2023.
Despite the fall of the Awami League government on August 5, 2024, amid a student-led uprising, the Bangladesh Bank has retained the previous regime鈥檚 lenient loan rescheduling policy, which allows defaulters to negotiate directly with banks without prior central bank approval.
This continuity has encouraged widespread use of the facility, helping many defaulters avoid classification.
As a result, the volume of non-performing loans (NPLs) in the banking sector soared by Tk聽2 lakh crore in just one year, reaching a record Tk 3.45 lakh crore by December 2024.
This sharp increase follows the exposure of massive amounts of previously concealed toxic loans that had been misreported under the former regime.
According to BB data, NPLs rose from Tk 1,45,633 crore in December 2023 to Tk 1,82,295 crore in March, Tk 2,11,391 crore in June, and then to Tk 2,84,977 crore by September, before hitting Tk 3.45 lakh crore in December 2024.
Currently, nearly 20 per cent of the total outstanding bank loans 鈥� Tk 17.11 lakh crore 鈥� are classified as non-performing, the highest such ratio in South Asia.
Bankers say the sharp rise in defaults has led to a parallel surge in loan rescheduling, as banks seek to clean up their balance sheets before the year-end.
Weak business conditions have also contributed to rising loan defaults.
Distressed assets in the banking sector鈥攃omprising NPLs, rescheduled loans, written-off loans, and those under court stay鈥攖otaled nearly Tk 5.5 lakh crore by the end of 2023.
According to the Financial Stability Report 2023 by the Bangladesh Bank, outstanding defaulted loans stood at Tk 1,45,633 crore, rescheduled loans at Tk 2,88,540 crore, written-off loans at Tk 53,612 crore, and about Tk 60,000 crore remained unclassified due to ongoing court cases.
Financial experts note that a key driver behind the rescheduling spree in 2023 was the further relaxation of rules ahead of the January 2024 general elections.
These changes allowed banks to restructure loans with minimal down payments and long repayment tenures 鈥� primarily benefiting large businesses seeking to avoid default tags that would bar them from contesting elections.
Under a BB circular, loans could be repeatedly rescheduled with down payments as low as 2.5 per cent and repayment periods of up to 29 years.
Experts argue that instead of enforcing financial discipline, the central bank has continued to shield defaulters, exacerbating the burden of bad loans on the banking system.