The finalization of the 2024 annual financial statements of most banks in Bangladesh has stalled, following the central bank’s decision to withhold the special exemptions and extended deadlines that had previously supported the sector. Of the 36 banks listed on the capital market, 24 have not yet finalized their financial reports-despite the April 30 deadline. The same is reportedly true for most of the country’s 25 unlisted commercial banks.
This backlog in financial reporting has sparked concerns among investors, regulators, and market observers, with implications ranging from shareholder uncertainty to delayed dividend announcements and a possible loss of confidence in the country’s banking system.
Tougher Conditions, No Exemptions: According to sources within Bangladesh Bank and several private banks, the central bank has adopted a more rigid stance this year, aiming to present a more accurate financial picture of the banking sector. This includes not allowing the leniencies previously granted on provisioning for non-performing loans (NPLs) and on compliance with regulatory guidelines.
“Earlier, banks were allowed to defer a portion of their required provisions or use various special accounting treatments to artificially improve their balance sheets,” said a senior executive of a private commercial bank. “But this year, the central bank has insisted on strict compliance with the actual rules.”
In the past few years, Bangladesh Bank had provided a series of regulatory relaxations in response to pressures from the COVID-19 pandemic, macroeconomic instability, and sector-wide liquidity crises. These included extended timelines for provisioning, restructured loan facilities, and favorable accounting interpretations. But such special measures have now been rescinded in a move toward greater financial transparency.
Impact on Defaulted Loans and Provisions: With the easing of regulatory accommodations, many banks have been forced to recognize the full extent of their defaulted loans. Consequently, the required provisioning against these loans has also increased sharply. This has made it difficult for several institutions to finalize their financial reports within the given timeframe, as they now need to show larger provisioning expenses on their income statements, which directly affect profitability. “Provisions have to be made in full now,” said an official at a state-owned bank. “Those changes everything. You can’t just window-dress the books anymore. Naturally, the reports are delayed because banks need time to comply, and many were not ready for this level of transparency.” This strict adherence to provisioning requirements has directly impacted the ability of many banks to declare dividends. Bangladesh Bank has clearly communicated that any bank failing to meet its provisioning requirements will be barred from announcing or distributing dividends to shareholders-a move aimed at ensuring that institutions prioritize long-term financial health over short-term investor payouts.
24 Listed Banks Fail to Meet Deadline: Of the 36 banks listed on the Dhaka and Chittagong stock exchanges, 24 failed to publish their financial statements by the April 30 deadline. This delay has caused frustration among stock market investors who were expecting dividend declarations and financial disclosures to help them assess performance and make informed decisions.
“Investors are left in the dark. They want to know the health of the banks they’re investing in, especially during a time of economic uncertainty,” said Saifur Rahman, an analyst at a private equity firm in Dhaka. “A delay in publishing financial reports not only breeds speculation but also damages market sentiment.”
The delayed reporting has also had a noticeable effect on the stock prices of several banks, particularly those known to have higher levels of defaulted loans. Analysts say investor confidence has eroded due to the lack of transparency and the prolonged silence from bank managements regarding the financial position of their institutions.
Possible Extension in the Works: In response to the delays, discussions are ongoing within the regulatory and banking community to extend the finalization deadline by one more month. Although no official notification has been published, insiders indicate that Bangladesh Bank may allow banks until the end of May to complete their financial reports, provided they meet the new compliance standards in full.
“This extension, if given, will not be a blanket waiver like in the past,” a central bank official clarified. “It will only be for technical preparation, not for manipulating figures or deferring provisioning.” Banking sector insiders have welcomed the potential extension but insist that more structural changes are needed to help banks adjust to the stricter compliance environment.
A Sector in Transition: The current situation underscores a deeper transition underway in Bangladesh’s banking sector. While the tightening of regulatory oversight and enforcement of provisioning norms is seen by many as a positive long-term step, the short-term fallout is proving difficult for institutions already under pressure from weak loan recovery rates, rising NPLs, and declining profitability.
According to the latest data from Bangladesh Bank, the total volume of classified loans in the banking sector stood at Tk 145,633 crore at the end of 2024, accounting for more than 10% of the total outstanding loans. Many experts argue that this figure would be even higher if all banks had fully complied with the provisioning requirements without past exemptions.
Economist Dr. Zahid Hossain said, “The absence of regulatory leniency is good for the sector’s integrity, but the transition needs to be managed carefully. A sharp shift can create panic and further destabilize already fragile institutions.”
Unlisted Banks Also Struggle: The situation is equally dire for the 25 unlisted commercial banks operating in the country. These institutions, though not publicly traded, are required to submit annual financial statements to the central bank and maintain capital adequacy ratios in line with Basel III guidelines. Many of them, especially newly established banks and some Shariah-based institutions, are reportedly struggling to comply with provisioning norms and finalize their accounts.
“The real financial conditions of many of these banks are now exposed,” said a senior auditor at a top accounting firm in Dhaka. “What we’re seeing is just the tip of the iceberg.”
Shareholder Frustration Mounts: With dividends being withheld due to compliance issues, and financial reports delayed, shareholders-both institutional and retail-are becoming increasingly vocal. Many are calling for greater transparency, stronger corporate governance, and more proactive communication from bank boards.
“The banks should have prepared better,” said Anwar Hossain, a retail investor who holds shares in four listed banks. “They’ve known for months that the rules would be stricter this year. Why are they still asking for time?”
The delay in finalizing financial reports for 2024 by 24 of the 36 listed banks, along with many unlisted ones, points to a sector grappling with the consequences of greater regulatory oversight and a push toward transparency. While the central bank’s strict enforcement is likely to improve the financial health and credibility of the banking sector in the long run, the immediate impact has exposed significant weaknesses in reporting, risk management, and internal controls. As discussions continue around extending the reporting deadline, the episode serves as a stark reminder that genuine reform in the banking sector cannot occur without both regulatory resolve and institutional preparedness. The onus now lies on the banks to rise to the occasion-or risk losing the trust of regulators, investors, and depositors alike.
