Court stay orders has shielded 1,086 borrowers from being classified as defaulters, forcing banks to show Tk聽1.63 lakh crore in unpaid loans as regular, according to a Bangladesh Bank report.
According to the central bank report, as of June 2025, a total of 1,086 borrowers had filed writ petitions in court to secure such protection for 27,302 number of defaulted loans.
Because of these petitions, Tk聽1,63,150 crore in defaulted loans remains stuck in litigation, leaving the cases unresolved for years.
Though these borrowers owe an average of Tk聽150 crore, they are being treated like regular clients, with continuing to secure fresh loans, open letters of credit, and even become eligible to serve as bank directors or participate in elections.
聽By law, banks must classify any loan overdue for six months as defaulted.
A defaulter is barred from taking new loans, opening LCs for import-export, holding directorship in banks, or contesting elections. Before approving new credit, banks require to verify borrower status through the Credit Information Bureau.
However, once a stay order is obtained, defaults are not reported to the CIB, enabling delinquent borrowers to retain all privileges without repayment.
Bangladesh Bank governor Ahsan H Mansur at a press conference in July said that a defaulter should be recognised as a defaulter, even if a stay order exists. He stressed that the central bank, the government, and the judiciary must act in unison to end this loophole, otherwise the financial sector cannot recover.
The central bank has already started working on proposals to amend the Bank Company Act and the Money Loan Court Act to introduce stricter provisions against legal protection for defaulters.
The non-performing loan figure has nearly doubled in a year, climbing to Tk 4.20 lakh crore in March 2025 from Tk 1.82 lakh crore in March 2024, according to the BB data.
In December 2023, the amount was Tk 1.45 lakh crore, which grew rapidly to Tk 2.11 lakh crore by June, and Tk 3.45 lakh crore by December 2024, before ballooning further this year.
Experts said that a massive amount of NPLs surfaced after the central bank had begun revealing the actual financial condition of banks following the ouster of authoritarian Awami League regime under which politically connected large bank borrowers had enjoyed undue privileges and regulatory leniency.
They said that many of these borrowers were wilful defaulters who siphoned funds abroad.
Many defaulters obtain injunctions cheaply, continue accessing loans, and even distribute dividends while banks suffer losses.
To counter this, the Bangladesh Bank has barred banks with provision shortfalls from declaring dividends.
Defaulters increasingly file declaratory suits in lower courts to block CIB listing, then appeal to the High Court after rejection, securing long extensions of stay orders.
The Bangladesh Bank has urged banks to strengthen their legal teams to accelerate pending cases.