Bangladesh’s banking sector is grappling with a significant rise in default loans, despite efforts by Bangladesh Bank to curb them. Defaulted loans in offshore banking units surged by 33.88% year-on-year, even as loans in this segment declined by 7.68%, according to central bank data.
Offshore banking, which caters to foreign entities and operates in foreign currency, remains largely unregulated, contributing to its growing challenges. By March 2024, loans in offshore units fell to Tk 72,437 crore, down from Tk 78,434 crore the previous year. Simultaneously, defaulted loans rose to Tk 1,877 crore from Tk 1,402 crore. State-owned, private, and foreign banks all reported higher defaults, with private sector banks’ defaults increasing by Tk 314 crore, and foreign banks’ defaults by Tk 161 crore.
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