Default loans might be 18% more than official figure: BB governor
The governor also highlighted the growing financial challenges
Default loans in the banking sector could be 18% higher than the current official figure of 12.5%, Bangladesh Bank Governor Ahsan H Mansur said today (1 December).
"Default loans are expected to reach 25-30% in the future, up from the current 12.5%. By next month, the rate is projected to be 15%, then 17%, and gradually reach 30%. These defaults have effectively already occurred and will officially reflect in the coming months. Efforts are now underway to address and reduce the issue," he told the chief adviser during the handover of the final draft of the White Paper on the State of the Bangladesh Economy.
The governor also highlighted the growing financial challenges.
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Mansur explained that the increasing defaulted loans are a legacy issue from the previous government, which had long kept them hidden.
"These problems are now surfacing, and addressing the rising defaulted loans will be one of our priorities," he said.
He went on to say, "Half of the defaulted loans are held by a few large groups, while the other half involves borrowers across the country. Since 2017, a significant amount of funds has been withdrawn and laundered at an accelerated pace, which he emphasised should be included in the report."
The governor also stressed the need to strengthen institutional frameworks and compliance measures, calling for consultative solutions to address systemic issues.
To recover the bank assets, he mentioned that the Bangladesh Bank has sought support from international organisations and will begin an asset-quality review on 11 December, starting with 6-12 banks and eventually expanding to 25.
"This will help us assess the true financial health of the banks," Manur added, noting that several global organisations are assisting with the review process.
The governor clarified that the central bank's role is not to protect individual banks but to safeguard depositors.
He reassured the people that liquidity support is being provided to banks facing a crisis, aiming to restore customer confidence in the banking sector.
