Banks rescheduled Tk 7,909 crore in defaulted loans during the January鈥揗arch period of 2025 as Bangladesh Bank continued the previous government鈥檚 lenient rescheduling policy.
It marked a significant increase from the same period in the previous year, when banks had rescheduled Tk聽2,448 crore 鈥� a rise of Tk聽5,461 crore year-on-year.
Besides, banks rescheduled total Tk聽35,850 crore in October鈥揇ecember 2024 as the banks often rush to reschedule large volumes of defaulted loans during the final quarter of the year to improve the appearance of their financial statements.
Banks rescheduled a record Tk聽44,000 crore in defaulted loans during the final quarter of 2023 alone.
At the same time, the volume of written-off loans continued to grow, reaching Tk聽81,862 crore by the end of March 2025. In just the first quarter of 2025, banks waived Tk聽578 crore in loan amounts.
Despite increased loan rescheduling efforts, the volume of defaulted loans in Bangladesh鈥檚 banking sector continues to rise.
The amount of non-performing loans in the country鈥檚 banking sector has soared by Tk聽74,570 crore in just three months to reach Tk聽4.20 lakh crore at the end of March 2025.
Non-performing loans now account for 24.13 per cent of total loans disbursed by the country鈥檚 banks, placing Bangladesh at the top of South Asia鈥檚 list of worst-performing banking systems.
Experts said the surge in defaults reflects the central bank鈥檚 recent move to reveal the true state of bank balance sheets, following the fall of the Awami League government in August 2024 through a mass student-led uprising.
During the previous regime, large politically connected borrowers were often shielded through regulatory forbearance, repeated rescheduling, and relaxed oversight. A significant portion of bad loans had been concealed for years under the guise of rescheduling and data manipulation.
Although the current Bangladesh Bank governor, Ahsan H Mansur, had long criticised these lenient practices, he has so far kept the same policies in place. As a result, capable borrowers feel discouraged from making timely repayments, while defaulters continue to benefit from generous restructuring terms.
In September 2022, Bangladesh Bank allowed banks to reschedule loans without prior approval from the central bank. This policy gave borrowers more leverage to negotiate directly with banks, bypassing oversight.
Further relaxation of the rules ahead of the January 2024 national election enabled borrowers to reschedule loans with down payments as low as 2.5 per cent and repayment periods of up to 29 years.
Instead of enforcing discipline, the central bank continues to facilitate defaulters, leaving banks burdened with bad loans, they said.
The central bank鈥檚 Financial Stability Report 2023 showed that the banking sector held Tk聽1,45,633 crore in defaulted loans, Tk聽2,88,540 crore in rescheduled loans, Tk聽53,612 crore in written-off loans, and Tk聽60,000 crore in loans unclassified due to court-issued stay orders.
Loan rescheduling rose sharply in recent years, with Tk聽91,221 crore restructured in 2023 alone, up from Tk聽19,810 crore in 2020.
Experts said that this surge was partly driven by business groups seeking to qualify for election candidacy, which legally excludes loan defaulters.