Bangladesh’s banking sector is grappling with an unprecedented crisis, particularly within its four major state-owned banks: Sonali, Janata, Agrani, and Rupali. These institutions, once pillars of the nation’s financial system, are now at the epicenter of a multifaceted disaster characterized by plummeting loan disbursements, soaring non-performing loans (NPLs), administrative chaos, and a profound loss of public trust.
Declining Loan Disbursements Amid Economic Stagnation: Central bank data reveals a concerning trend: the combined loan portfolio of Sonali, Janata, Agrani, and Rupali banks decreased by approximately BDT 8,378 crore over the past six months, dropping from BDT 3,12,604 crore in December 2024 to BDT 3,04,226 crore by June 2025. This decline is attributed to a combination of economic stagnation and a severe credit crunch in the private sector, leading to a significant reduction in loan disbursements.
The situation is exacerbated by a staggering increase in NPLs. As of June 2025, the total NPLs in these four banks amounted to BDT 1,46,361 crore, representing 48.10% of their total loans.  Alarmingly, the provisioning for these bad loans remains insufficient, with a collective shortfall of BDT 68,036 crore across all but Sonali Bank.
Administrative Breakdown and Governance Issues: The governance structures of these banks have deteriorated significantly. Following the political upheaval in 2024, the boards and managements of these institutions were overhauled, often appointing new managing directors with limited banking experience. This lack of expertise has led to ineffective leadership and a breakdown in administrative discipline. In an unprecedented move, nearly 8,000 employees across these banks were granted ‘supernumerary’ promotions-positions without defined roles-disregarding established organizational structures. This mass promotion has further strained resources and created internal chaos. Employees have resorted to protests, including blocking managing directors’ offices, demanding additional bonuses, despite regulations limiting such incentives.
A senior official from one of these banks expressed concern, stating, “The current leadership lacks the competence to steer the bank through this crisis. The administrative chaos is palpable, and the staff morale is at an all-time low.”
Corruption and Political Interference: The roots of the current crisis can be traced back to years of mismanagement and political interference. During the previous administration, state-owned banks were subjected to politically motivated loan distributions, often to influential business groups with close ties to the ruling party. These loans, many of which were unsecured or based on inflated valuations, have now turned into massive defaults.
Janata Bank, for instance, reported that 72% of its total disbursed loans were in default by the end of 2024, with a capital shortfall of BDT 52,890 crore.  Similarly, Agrani Bank’s NPLs accounted for 40.5% of its loans, with 87% classified as bad loans. Investigations have revealed that several large conglomerates, including S Alam Group, Beximco, and Crescent Group, owe significant sums to these banks. For example, Sonali Bank alone has Tk 5,948 crore in defaulted loans from just three groups: Hallmark, Beximco, and Thermax. 
In a shocking revelation, Bangladesh’s central bank governor, Ahsan Mansur, accused tycoons linked to the former regime of siphoning off approximately $17 billion from the banking sector. He alleged that the Directorate General of Forces Intelligence (DGFI) facilitated the takeover of banks by these individuals, enabling them to divert funds through inflated loans and import invoices. 
Public Outcry and Institutional Collapse: The public’s trust in these institutions has eroded completely. Protests by bank employees demanding higher bonuses and promotions have become commonplace, disrupting daily operations. In some cases, employees have blocked access to managing directors’ offices, demanding their overdue incentives.
A senior bank official lamented, “The situation is untenable. Employees are more focused on their bonuses than on serving customers. The administrative structure has collapsed, and the banks are in a state of paralysis.”
The lack of accountability is evident, as no employee has been dismissed or prosecuted for their involvement in past financial scandals. Instead, many have been promoted, further entrenching a culture of impunity.
The Way Forward: Urgent Reforms Needed: Experts argue that immediate and comprehensive reforms are essential to salvage the state-owned banking sector. This includes: Independent Audits: Conducting thorough audits by reputable international firms to assess the true extent of financial mismanagement and corruption. Legal Accountability: Establishing special tribunals to prosecute loan defaulters and bank officials involved in fraudulent activities.
Leadership Overhaul: Appointing experienced and competent professionals to lead these banks, ensuring that political considerations do not override merit.
Capital Injection: The government must provide adequate capital to these banks to meet regulatory requirements and restore solvency.
A prominent economist emphasized, “Without stringent reforms and a commitment to accountability, these banks will continue to be a drain on the economy, undermining public confidence and stability.”
Bangladesh’s state-owned banks are at a crossroads. The confluence of economic challenges, administrative dysfunction, and deep-rooted corruption has brought these institutions to the brink of collapse. Without decisive action and structural reforms, the repercussions will be felt across the economy, affecting millions of depositors and the nation’s financial stability.
The upcoming meeting convened by the Ministry of Finance to review the financial health of these banks is a critical opportunity to initiate the necessary reforms. The nation’s economic future may well depend on the decisions made in the coming days.