Non-performing loans in business-trading sector at 42%, investment and growth at risk: BB
Non-performing loans (NPLs), long considered a "disease" in the country's banking sector, have now spread alarmingly into the production-oriented industrial sector as well, according to the latest report from the Bangladesh Bank.
The report says that by December 2025, the NPL rate in the business and trade sector stood at 42%.
This volume of bad loans is seen by experts as putting the country's investment environment and overall economic growth at serious risk.
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Analysis of central bank data shows that by December 2025, the total loans disbursed in the business and trade sector amounted to Tk5,94,624.55 crore, which represents 33% of total bank lending. Alarmingly, 42% of this enormous amount has now become non-performing.
However, compared to September of the same year, there was a slight decline in NPLs by December. At the end of September, loans in this sector stood at Tk5,74,187 crore.
In the industrial sector, 43% of total bank loans are allocated. According to the report, by December, loans disbursed in this sector totaled Tk7,64,117 crore, of which 30.8% have turned non-performing.
Why are NPLs increasing?
Bankers say a key reason in the industrial sector is the lack of proper lending rules and political influence. Many influential groups withdraw money from banks under false names and transfer it abroad, and the funds are never returned.
On the other hand, industrial entrepreneurs cite global conditions. They explain that the post-COVID increases in production costs and disrupted supply chains prevented timely repayment of loan installments, resulting in defaults.
Compared to September 2025, the NPL rate in the industrial sector improved by 7 percentage pointsby December, falling from 37-30.8%.
An additional managing director of a private bank, speaking on condition of anonymity, said, "This high level of non-performing loans could trigger a severe liquidity crisis in the banking sector. New investments will be hindered, and employment may decrease. Banks may raise interest rates to manage risks. Many banks could face existential threats due to capital shortfalls."
