Bangladesh’s banking crisis has deepened to a point where nearly Tk33 of every Tk100 lent by banks is now in default, exposing the scale of bad loans accumulated through years of weak oversight, irregular lending and repeated regulatory concessions.
Non-performing loans (NPLs) climbed to Tk606,555 crore at the end of June 2026, equivalent to 32.78% of all outstanding loans, according to Bangladesh Bank data.
The figure increased by Tk17,851 crore in just three months from Tk588,704 crore at the end of March, although it remains below the record Tk644,515 crore registered in September 2025.
The deterioration has put Bangladesh at the extreme end of the global bad-loan spectrum, with its NPL ratio now exceeding that of war-hit Ukraine.
Banking-sector insiders, however, say the surge does not mean hundreds of thousands of crores of taka suddenly went bad.
Rather, tighter classification rules, audits and asset quality reviews are exposing loans that had previously been kept outside the default category through rescheduling, special concessions and accounting adjustments.
The five banks undergoing merger are in the gravest condition, with more than 80% of their loans classified as non-performing. Several other state-owned and private banks have default ratios exceeding 50%.
Bankers and experts blame politically influenced and anonymous lending, fraud, weak supervision, the economic slowdown and the energy crisis for the deterioration.
Bangladesh Bank has tightened loan-classification and provisioning rules, introduced risk-based supervision, restructured boards of troubled banks and begun asset quality reviews.
The IMF has warned that these measures could expose still more bad loans.
Experts say bringing down the ratio on paper through indiscriminate rescheduling or write-offs will not resolve the crisis.
They argue that recovery of the money will require action against wilful defaulters, seizure of their assets, faster disposal of loan-recovery cases and an end to political interference in bank lending.
Until then, the Tk606,555 crore mountain of bad loans remains one of the biggest threats to Bangladesh’s financial system.
