Janata Bank's top 33 clients default on Tk56,131cr

Highlights:

• 33 large Janata Bank defaulters owe Tk56,131 crore combined
• Most loans breached single-borrower limits via special approvals
• Political influence and weak oversight enabled excessive risky lending
• Janata Bank now has highest NPL ratio among state banks
• NPLs reached 71% of loans, capital deficit worsened sharply
• 77% of loans concentrated in just five branches

State-owned Janata Bank's exposure to a small group of risky borrowers has intensified, with defaulted loans from just 33 large clients now totalling Tk56,131 crore, according to internal documents reviewed by The Business Standard.

The records show these borrowers received loans exceeding 10% of the bank's regulatory capital, classifying them as "large borrowers." Of these, 27 clients received loans surpassing the 25% single-borrower limit set by Bangladesh Bank, often through special approvals.

Md Mazibur Rahman, managing director of Janata Bank, said the bank is pursuing two main recovery paths. "First, through auctioning assets and restructuring loans. Second, for operational businesses, we are bringing them back into compliance under policy guidelines," he told TBS.

He added that recoveries from non-performing loans (NPLs) have doubled compared with last year. "We have filed cases against large defaulters. While some are attempting to delay through legal stays, we are countering them in court. We expect improved recoveries in the coming months."

Bankers and analysts said a lack of transparency in loan distribution, political influence, and lax regulatory oversight allowed large clients to borrow excessively from state-owned banks. Easing of supervision by Bangladesh Bank has also contributed to this trend.

Infograph: TBS

The central bank's large loan policy stipulates that a bank's exposure to a single individual, group, or related entity must not exceed 25% of its eligible capital, to prevent excessive concentration of risk. 

If the limit is breached, new lending must stop, a risk-reduction plan adopted, and exposures brought back within the prescribed limit within a set timeframe, according to the central bank's large loan policy.

As of December 2024, only 24 Janata Bank clients had borrowed above the capital limit under special approvals. At that time, the top 31 defaulting borrowers owed Tk54,443 crore.

Bangladesh Bank spokesperson Arif Hossain Khan said single-borrower limits are intended to protect banks from excessive risk. "Some borrowers also failed to settle non-funded loans, like letters of credit, on time, forcing banks to convert them into funded loans, which raised overall credit risk. 

Political intervention also played a role in several major loans," he added, citing S Alam Group and Beximco as examples where loans exceeded limits due to exceptional circumstances.

Janata tops in NPLs

Formed in 1972 through the merger of Pakistan-era United Bank Limited and Union Bank, Janata Bank was comparatively strong among state-owned banks during the 1990s and early 2000s, with a solid presence in import-export financing, government transactions, and remittances.

However, rising defaults and governance weaknesses undermined its position. Among the four major state-owned commercial banks, Janata Bank is now the worst hit by NPLs. 

As of September 2025, 70% of its total loans were classified as non-performing, compared with 51% at Rupali Bank, 40% at Agrani Bank, and 20% at Sonali Bank.

Financially, Janata Bank recorded a total loss of Tk3,071 crore at the end of 2024, compared with Tk937 crore for Agrani Bank. Rupali Bank and Sonali Bank remained profitable, posting net profits of Tk8 crore and Tk866 crore respectively.

By June 2025, Janata Bank's NPLs had risen to Tk72,107 crore, nearly 71% of its total loan portfolio. The NPL ratio was 68% in December 2024, 25% in 2023, and 18% in December 2022. By June this year, the bank had recovered only Tk56 crore – 4% of the target.

Capital erosion has also been severe, with the bank's deficit plunging from Tk9,262 crore in December 2022 to Tk65,093 crore by June 2025.

11 top defaulters

Janata Bank's top 11 defaulters account for Tk42,820 crore. Beximco Group owes Tk23,000 crore, S Alam Group Tk9,400 crore, Crescent Group Tk2,050 crore, Ranka Group Tk1,720 crore, Ratanpur Group Tk1,227 crore, Rimex Footwear Ltd Tk1,080 crore, Sikder Group Tk829 crore, Janakantha Group Tk809 crore, Lithun Fabrics Tk805 crore, Annontex Group Tk800 crore, and Habib Hotel International Tk700 crore.

Former managing director Md Abdul Jabbar said most of these loans were regular before 5 August. 

"After the fall of Hasina's government, these loans surfaced. Borrowers had taken loans under multiple company names, but did not acknowledge them as a single group. I was the first to consolidate all of Beximco's loans under one group," he said.

He added that some recoveries will require legal action, including selling collateral, while operational businesses should be supported to facilitate repayment. 

"Large defaulters have invested domestically under multiple names, and there is significant collateral. With strict government-backed measures, these loans can be recovered, which is key for Janata Bank to regain stability," Jabbar said.

Loan concentration at 5 branches

At Janata Bank, 77% of total loans – Tk76,840 crore – are concentrated in just five branches, with over 39% at the Local Office branch alone, despite 929 branches nationwide.

Arfan Ali, former managing director of Bank Asia, explained that deliberate defaulters target specific branches, often using political influence to control management, resulting in concentrated lending.

"In some branches, loans far exceed deposits. To meet client demands, funds are transferred from other branches, creating opportunities for misappropriation and embezzlement," he said.