Thirteen banks in Bangladesh have violated the central bank鈥檚 advance-to-deposit ratio (ADR) limit as of March 2025, with seven of them lending over 100 per cent of their deposits, putting them in a highly vulnerable position.
Such overexposure comes amid a backdrop of liquidity shortages, governance lapses, scams and persistent non-performing loans, which experts said severely undermined depositor confidence and trigger broader systemic risks.
The ADR reflects the proportion of loans (excluding Export Development Fund and refinancing) disbursed by a bank against its total deposits including interbank surplus.
To manage liquidity risk, Bangladesh Bank has set a ceiling of 87 per cent for conventional banks and 92 per cent for Shariah-based banks.
This means conventional banks will be able to disburse Tk 87 as loans against every Tk 100 deposit while Shariah-based banks Tk 92.
When the ADR crosses 100 per cent鈥攁s it has for seven banks鈥攊t indicates that loans are outpaced deposits and are being financed through borrowed funds or short-term interbank borrowing.
Among the violators, First Security Islami Bank is the most severely exposed, with a staggering ADR of 136.43 per cent, according to Bangladesh Bank data.
As of March, 2025, the bank had loans amounting to Tk 60,901.88 crore compared to deposits of Tk 44,640.76 crore.
Social Islami Bank reported an ADR of 124.09 per cent, lending Tk 35,760.31 crore against deposits of just Tk 28,817.85 crore.
Union Bank posted a loan portfolio of Tk 28,221 crore against deposits of Tk 23,631 crore, crossing the limit with an ADR of 119.42 per cent.
Global Islami Bank held deposits of Tk 12,447 crore and advances of Tk 14,273.09 crore, resulting in an ADR of 114.67 per cent.
Islami Bank Bangladesh, the largest Shariah-based bank, had an ADR of 102.5 per cent, with advances at Tk 1,66,730 crore and deposits at Tk 1,62,655 crore.
In conventional banking, United Commercial Bank also violated ADR limit, reaching 89.72 per cent with a loan portfolio of Tk 53,613.78 crore against deposits of Tk 59,759.4 crore
EXIM Bank with an ADR of 120.28 per cent, National Bank 118.29 per cent, AB Bank 98 per cent, BASIC Bank 93.38 per cent, Janata Bank 93.11 per cent, Standard Bank 93.81 per cent, IFIC Bank 87.06 per cent also breached ADR rules, underscoring a widespread disregard for regulatory.
Premier Bank and Padma Bank have narrowly avoided breaching the ADR cap with the ratio reaching 86.87 per cent and 86.18 per cent respectively.
Many of the banks faced difficulties in meeting depositor withdrawal demands in recent months due to their thin liquidity positions and mismatches between loans and deposits.
The situation reflects not only poor risk management but also raises questions about regulatory enforcement and the strength of internal controls in the banking system.
Other banks such as Citizens Bank, NRB Bank, SBAC Bank and Southeast Bank reported ADRs between 84 to 85 per cent in March, signaling they are close to breaching the threshold and may soon follow the others into risky territory unless corrective action is taken.
The central bank had previously attempted to tighten control by capping ADRs at 85 per cent for conventional banks and 90 per cent for Islamic banks.
However, under pressure from politically connected bank owners, Bangladesh Bank in 2020 relaxed the ADR ceiling鈥攔aising it to 87 per cent and 92 per cent respectively.
Such regulatory approach encouraged some banks to operate recklessly and ignore prudent lending practices.
As a result, banks have become increasingly reliant on emergency funding from the central bank and short-term market borrowing.
According to Bangladesh Bank data, the average ADR across the banking sector stood at 80.33 per cent in March 2024, slightly up from 80.10 per cent in February, though down from 81.55 per cent in December 2023.