Private banks in Bangladesh are grappling with increasing non-performing loans (NPLs) and provisions. NPLs have surged in these banks due to a rise in default loans. According to a presentation by the Centre for Policy Dialogue (CPD), in the fourth quarter of the 2011-12 fiscal year, NPLs in private banks accounted for 31% of the total, rising to 49% in the 2023-24 fiscal year’s second quarter.
This trend reflects a decline in these banks’ performance over the past 12 years. Moreover, inadequate provisioning for bad loans poses a significant risk to bank stability. The mismatch between necessary provisions and actual provisioning exacerbates the problem. Bank accounts also show a deteriorating return on assets and return on equity. Additionally, excessive liquidity in bank accounts has decreased significantly, affecting overall banking health and exacerbating social disparities.
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