Non-performing loans (NPLs) in Bangladesh’s banking sector rose by nearly Tk18,000 crore in the three months to June, pushing the total above Tk6 lakh crore despite Bangladesh Bank’s efforts to contain the growing problem.
According to Bangladesh Bank data, the banking sector’s default loan ratio increased to 32.79% in June from 32.26% in March. The total volume of default loans stood at around Tk5.8 lakh crore in March.
The increase came as private-sector credit growth fell to a historic low of 4.47% in June, reflecting weak business activity amid a prolonged energy crisis. The slowdown has disrupted borrowers’ cash flows, causing more existing loans to turn sour.
Bangladesh Bank’s special loan rescheduling programme, introduced last year, has also failed to provide a lasting solution. Around 300 borrowers rescheduled or restructured loans worth nearly Tk1 lakh crore under the facility announced in September 2025. The package allowed repayment over 10 years, including a two-year grace period.
The central bank has now extended the facility for a second time with more relaxed terms. Under the latest package announced on 31 August, borrowers with loans exceeding Tk1,000 crore can reschedule them over up to 15 years, including a two-year grace period. The restructuring period has also been extended to four years from two.
Bangladesh Bank Director and Assistant Spokesperson Shahriar Siddiqui said repeated economic pressures, including the gas crisis and higher oil prices following the Iran war, had placed industries under strain.
He said the resulting disruption to normal cash flows prompted the central bank to introduce more flexible repayment arrangements. Business groups had also requested an extension of the facility, citing the continuing energy crisis.
The default loan ratio had temporarily declined to 30.60% in December 2025 following loan rescheduling. It climbed again to 32.26% in March as some borrowers who had benefited from the earlier facility failed to make repayments.
Meanwhile, Bangladesh Bank has launched a Tk60,000 crore subsidised financing package aimed at supporting struggling industries and improving their ability to repay bank loans.
All commercial banks are eligible to participate in the refinancing programme. Under the scheme, eligible borrowers will receive loans at an interest rate of 7%, compared with an average market lending rate of more than 10%.
The central bank hopes stronger business activity and improved cash flows will help borrowers repay their loans and eventually reduce the banking sector’s mounting default loan burden.
