Non-performing loans surge across 44 banks, including strong lenders

Despite a series of regulatory concessions aimed at containing non-performing loans (NPLs), defaulted debt rose at 44 of the country's 61 scheduled banks during the January-March quarter – an unprecedented breadth of deterioration, according to central bank officials. 

The increase was not confined to chronically weak lenders; several financially sound banks, including City Bank, Prime Bank, Bank Asia, Uttara Bank, and foreign-owned Standard Chartered Bank Bangladesh, also reported notable jumps.

Combined NPLs across the 44 affected banks rose by Tk31,487 crore in just three months. Sector-wide, total defaulted loans stood at Tk5.88 lakh crore at the end of March, equivalent to 32.26% of total outstanding loans, up from Tk5.57 lakh crore (30.60%) in December.

Bangladesh Bank officials attributed part of the rise to previously understated NPL figures reported in the December quarter. Subsequent inspections uncovered concealed defaulted loans, forcing upward revisions. They also cited broader economic stress that has weakened loan recovery across the banking sector.

State-owned banks: four of six slide further

Among the six state-owned banks, NPLs rose by Tk3,677 crore to Tk1,49,785 crore, accounting for 45.85% of their combined loan portfolio. 

Four banks recorded increases, led by Janata Bank, where NPLs rose by Tk2,258 crore to Tk75,000 crore – nearly 74% of its total loans. Rupali Bank increased by Tk688 crore, Agrani Bank by Tk284 crore, and BASIC Bank Limited by Tk11 crore.

Private banks bear the heaviest burden

The private banking sector saw the sharpest deterioration. NPLs across 43 private banks rose by Tk26,903 crore to Tk4,16,000 crore, or 30.11% of total loans. Thirty-four banks recorded increases, including several previously considered financially stable.

IFIC Bank led the surge, with NPLs jumping from Tk4,683 crore to Tk28,174 crore (63% of total loans). Islami Bank Bangladesh followed with Tk3,514 crore, EXIM Bank with Tk3,320 crore, and United Commercial Bank with Tk2,942 crore. 

National Bank Limited saw a rise of Tk2,162 crore, Premier Bank Tk1,699 crore, and AB Bank Tk1,313 crore.

Among stronger-capitalised banks, City Bank's NPLs rose by Tk422 crore, Bank Asia by Tk662 crore, Uttara Bank by Tk406 crore, Prime Bank by Tk392 crore, and Standard Chartered Bank Bangladesh by Tk216 crore. 

Other notable increases included Al-Arafah Islami Bank (Tk917 crore), First Security Islami Bank (Tk726 crore), Dhaka Bank (Tk453 crore), Dutch-Bangla Bank (Tk218 crore), Eastern Bank (Tk211 crore), Global Islami Bank (Tk193 crore), Bengal Commercial Bank (Tk31 crore), and Bangladesh Commerce Bank Limited (Tk13 crore).

The stress extended beyond commercial lenders. Bangladesh Krishi Bank's NPLs rose by Tk396 crore, Rajshahi Krishi Unnayan Bank's by Tk199 crore, and Probashi Kallyan Bank's by Tk34 crore. 

Among foreign banks, HSBC Bangladesh, Standard Chartered Bank Bangladesh, and State Bank of India also reported higher defaulted loans.

What bankers say

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, said economic stagnation is constraining business expansion and weakening repayment capacity, with some large borrowers increasingly relying on central bank policy support.

Md Touhidul Alam Khan, managing director and CEO of NRBC Bank, identified five key drivers behind the rise in non-performing loans.

He said previously concealed defaulted loans are now surfacing under stricter oversight, while the expiry of moratoriums and deferred repayment facilities has forced banks to reclassify stressed accounts. 

He also cited inflation, rising borrowing costs and global trade disruptions as factors squeezing cash flows, along with governance weaknesses in credit assessment and collateral valuation. Additionally, he said political interference in lending decisions has fostered a culture of wilful default among influential borrowers.