Defaulted loan rises to Taka 4.2 trillion, almost a quarter of disbursed loans –
Bangladesh’s banking sector continues to be in ailing health, as new figures reveal a significant jump in defaulted loans, painting a challenging picture for the sector and the economy. As of March quarter, 2025, the gross rate of these “bad loans” has surged to 24.13 percent, a notable increase that could impact everything from credit availability to economic stability, reports United News of Bangladesh (UNB).
The recent report of Bangladesh Bank, the central bank of Bangladesh, indicates that across 61 scheduled banks, the total amount of defaulted loans hit a staggering Taka 4,20,334.94 crore in the first quarter of 2025. This is a considerable jump from Taka 3,45,764.86 crore just three months prior, in December (quarter) 2024.
In simpler terms, the percentage of loans at risk has gone up by 3.93 percent in just one quarter. According to the UNB, the problem isn’t just with the gross figures. When we look at “net classified loans” – after accounting for provisions and suspended interest – the rate also climbed to 15 percent by March 31, 2025, up from 10.57 percent in December 2024. This means a larger portion of the risky loans are not fully covered by the banks’ reserves.
Banks are also facing a widening “provision shortfall,” meaning they haven’t set aside enough money to cover potential losses from these bad loans. This deficit grew to Taka 1,70,655.32 crore in March 2025, a significant increase from Taka 1,06,130.82 crore in December 2024.
Consequently, the “provision coverage ratio,” which measures how well banks are prepared for loan losses, has dropped sharply to 37.97 percent from 50.75 percent. This indicates that banks are becoming less insulated against potential future shocks, reports UNB. State-owned commercial banks continue to bear the heaviest burden, with a staggering 45.79 percent of their loans classified as problematic. This is up from 42.83 percent just last quarter.
