Bangladeshi banks face a grim outlook as defaulted loans are expected to rise due to recent unrest, including a curfew and a five-day internet blackout. As of March, defaulted loans hit a record Tk 182,295 crore, 11.10% of total credit, but industry insiders suggest the real figure is much higher. Standard Chartered Bangladesh’s CEO noted that the unrest has severely impacted businesses, potentially leading to increased defaults and inflation.
The former chairman of the Association of Bankers, Bangladesh, highlighted that some borrowers have lost repayment capacity, and canceled export orders further strain the sector. The need for higher provisioning due to increased bad loans will hurt banks’ profitability.
Pubali Bank’s MD emphasized that the internet blackout and curfew disrupted loan repayments and banking services. With Bangladesh Bank’s directive to waive fees on delayed repayments during the blackout, the banking sector’s profitability is under further pressure.
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