The banking sector鈥檚 worsening crisis, driven by a sharp rise in non-performing loans is choking credit flow and weakening the business environment in the country.
At a seminar held on Saturday in Dhaka, speakers from the business community and financial sector stressed the urgent need for structural reforms, coordinated policy action, and protection for reliable borrowers to restore stability and trust in the financial system.
The event, titled 鈥楥urrent Challenges in the Banking Sector: Borrowers鈥� Perspective鈥�, was organised by the Dhaka Chamber of Commerce and Industry.
The NPLs reached an alarming Tk 4.2 lakh crore by March 2025, up from Tk 3.45 lakh crore just six months earlier, which is now account for over 24 per cent of total outstanding credit.
DCCI president Taskeen Ahmed said the surge in defaulted loans was the result of poor banking governance, weak loan recovery systems, and inadequate credit risk assessments.
The crisis has tightened lending conditions, raised collateral requirements, and pushed up interest rates, making it harder for businesses鈥攅specially small and medium enterprises鈥攖o access finance.
He proposed a six-month extension of the loan classification period to give distressed businesses time to recover without being marked as defaulters.
Anisuzzaman Chowdhury, special assistant to the Chief Adviser at the Ministry of Finance鈥檚 Economic Relations Division, underscored the need for better coordination between monetary and fiscal policies.
He also called for integration of financial sector reforms and suggested that banks in relatively stable condition could consider lowering interest rates to ease the burden on borrowers, particularly SMEs.
Anisuzzaman criticised global lenders for turning a blind eye to years of mismanagement under the previous government.
He questioned whether lenders like the International Monetary Fund (IMF), World Bank, and Asian Development Bank should share responsibility for supporting a system plagued by corruption and inefficiency over the last 15 years.
While these lenders praised Bangladesh鈥檚 economic progress before the political change in August 2024, they have now returned with renewed conditions and advice.
Referring to the IMF loan issued under the last government, he compared it to placing the economy in an ICU, with little chance of recovery.
He credited the student movement in 2024 for not just political change but also saving the economy from collapse.
Former DCCI president Ashraf Ahmed noted that the economy is under intense strain from various challenges including currency devaluation, high inflation, costly energy imports, import restrictions, and declining credit to the private sector.
Chronic gas shortages have reduced industrial output by up to 50 percent, and interest rates have risen from 9 per cent to around 14 per cent, adding an estimated Tk 1.39 lakh crore in additional interests burden on businesses for 2025.
Bangladesh Bank Executive Director Md. Ezazul Islam acknowledged that after FY2015, several banks fell under the control of vested family groups, contributing to sectoral instability.
However, he noted that following the political transition in August 2024, business confidence is beginning to return, supported by steps to stabilise reserves and adopt a market-based exchange rate.
He added that many banks are still functioning well and have room to reduce rates to support SMEs.
BKMEA鈥檚 Fazle Shamim Ehsan said good borrowers are often denied facilities due to their association with poorly performing banks.
Hossain Khaled of Anwar Group highlighted the domino effect large firm failures have on SMEs in the supply chain, and urged a shift from a transactional lending model to one based on partnership.
Abdul Hai Sarker, Chairman of the Bangladesh Association of Banks, stressed that legal bottlenecks are delaying NPL recovery and called for more functional courts and stronger enforcement coordination.
As the crisis continues, experts warned that without serious efforts to contain NPLs and unlock credit, Bangladesh could face shrinking investment, reduced production, and rising unemployment鈥攂ringing the economy dangerously close to prolonged stagnation.