Ten Banks Now Hold 72 Percent of Bangladesh's Bad Loans as Sector Ratio Hits 32.78 Percent

Bangladesh's banking sector is carrying a bigger pile of bad debt than at any point in recent memory, and fresh central bank data released this week shows just how lopsided the problem has become. Ten banks alone account for more than 72 percent of the entire system's non performing loans, a level of concentration that bankers and economists say points to a handful of institutions being run less like commercial lenders and more like financing arms for a small circle of favoured borrowers.

A Sector-Wide Slide

Total classified loans across Bangladesh's banking system stood at Tk 6,06,555 crore at the end of June 2026, equal to roughly 32.78 percent of all outstanding credit, according to Bangladesh Bank data reported this week by The Business Standard and The Daily Star. That single quarter added Tk 17,851 crore in fresh bad loans, up from Tk 5,88,704 crore just three months earlier in March. The trajectory over a longer stretch is even starker. The overall non performing loan ratio stood at 20.20 percent at the end of December 2024, then jumped to 30.60 percent by December 2025 under the central bank's own Financial Stability Report, and has kept climbing since. In other words, roughly a third of every taka Bangladeshi banks have lent out is no longer being repaid on schedule, and the pace of deterioration has not slowed even as the central bank rolls out one intervention after another.

Where the Damage Is Concentrated

What makes the current numbers so alarming is not just the total but the concentration. Ten banks together hold Tk 4,39,527 crore of that bad debt, which works out to more than 72 percent of the sector's entire defaulted loan stock sitting on just a handful of balance sheets. Islami Bank Bangladesh tops the list in absolute terms, with Tk 98,914 crore in non performing loans, equal to just over 52 percent of everything it has disbursed. That figure alone rose by Tk 6,799 crore in the six months since December 2025, when the bank's bad loans stood at Tk 92,115 crore, showing the slide has continued even after the change in the bank's ownership structure that followed the exit of the S Alam Group's board appointees.

Bank	Non performing loans (Tk crore)	Share of that bank's loans
Islami Bank Bangladesh	98,914	52.15%
Janata Bank	75,729	75.05%
First Security Islami Bank	60,645	97.08%
EXIM Bank	38,053	71%
Agrani Bank	32,133	43.98%
National Bank	28,276	65.46%
IFIC Bank	28,520	63.38%
Union Bank	27,134	96.78%
Social Islami Bank	29,799	78.15%
AB Bank	20,325	56.04%

Several of these banks are now lending into a hole rather than out of one. First Security Islami Bank and Union Bank both show non performing loan ratios above 96 percent, meaning almost nothing they have on their books is being serviced normally. At Janata Bank, one of the country's largest state owned lenders, roughly 80 percent of its bad loans are concentrated among just twenty defaulters, and the Beximco Group's exposure alone accounts for close to Tk 25,000 crore of that bank's troubled book, according to reporting by The Business Standard. Islami Bank's problems, meanwhile, trace back to the period when the S Alam Group effectively controlled the lender and directed a large share of its credit toward companies under the group's own umbrella, a pattern regulators and researchers have flagged for several years now.

What's Driving the Numbers

Md Ezazul Islam, director general of the Bangladesh Institute of Bank Management, offered a blunt breakdown of the roughly 30 percent sector wide default rate: about ten percentage points, he said, can be traced to ordinary economic strain such as slower business activity, energy costs and currency pressure, but the remaining twenty percentage points comes down to what he called willful default, irregularities and outright corruption in how loans were approved and monitored in the first place. That assessment lines up with a pattern BD Financial Review has tracked in its own recent coverage. Bangladesh Bank only this week moved to enlist 131 outside valuation firms to independently check the true worth of collateral pledged against big loans, an acknowledgment that inflated asset valuations have for years let borrowers walk away with financing far larger than their actual collateral could support.

A senior Bangladesh Bank official was equally direct in comments carried by The Business Standard, saying the scale of the current crisis "could not be resolved simply by rescheduling or restructuring loans again," a pointed remark given how heavily the regulator has leaned on rescheduling as its primary tool over the past two years. Islami Bank's acting managing director, for his part, told reporters the bank is "trying to recover the loans through cash payments and rescheduling," adding that filing court cases against borrowers is now treated as a last resort rather than an early option.

Bangladesh Bank's Response

The rescheduling tool the official referenced is itself brand new. In a circular issued in late August, Bangladesh Bank extended and widened its policy support facility for large defaulters, allowing borrowers whose outstanding loans exceed Tk 1,000 crore to reschedule repayment over as long as fifteen years, including a two year grace period, up from a previous ceiling of ten years. Smaller defaulters, those below the Tk 1,000 crore threshold, remain eligible for terms up to ten years. Borrowers have until September 30 to apply, and the central bank wants the restructured terms locked in by December 31. Crucially, the policy also lets institutions that already received support under earlier rescheduling rounds come back and stretch their terms even further, a provision some bankers privately worry could let serial defaulters keep pushing repayment further into the future rather than actually clearing their obligations.

Whether that combination of longer rescheduling windows and outside collateral verification will actually turn the tide is an open question. The World Bank, in assessments cited by The Business Standard, has separately flagged weak corporate governance and related party lending as structural risks running through Bangladesh's banking system, issues that go well beyond any single circular or valuation drive. For now, the sector's headline numbers keep moving in one direction: the ratio has risen every year since 2024, and the ten most troubled banks show no sign yet of having turned a corner.

What Comes Next

Depositors at the worst affected banks have already been given a preview of what a serious reckoning looks like. Sammilito Islami Bank, formed from the merger of several distressed Islamic banks, opened its doors to depositor withdrawals last week and saw more than 74,000 customers claim close to Tk 3,925 crore in just four working days, a figure the bank's own managing director called reassuringly manageable given the Tk 5,000 crore Bangladesh Bank had set aside to cover it. That episode offers a partial test case for how an orderly wind down of distressed loan books might play out elsewhere in the sector, even as the September 30 rescheduling deadline and the rollout of the new valuation regime will determine over the next few months whether the banking system's bad loan curve finally starts to bend, or keeps climbing toward an even larger reckoning.