Bangladesh’s state-run banks have routinely exceeded the single borrower exposure limit of 25% of their paid-up capital, with approval from the central bank. This practice has contributed to the fragile state of these banks. For example, Janata Bank’s loan exposure to Beximco Group reached Tk 25,000 crore, nearly 950% of its paid-up capital, with Tk 19,000 crore of that amount now defaulted. Similar exceptions were made for other conglomerates, including S Alam Group, Orion Group, and Bashundhara Group. In November 2022, the central bank relaxed the exposure limit for coal-based power plants for five years, enabling large loans for such projects.
By June 2023, four major state-run banks—Janata, Agrani, Sonali, and Rupali—had numerous borrowers exceeding the single-borrower exposure limit. As of September 2023, these six banks collectively reported defaulted loans totaling Tk 126,111.5 crore, or 40.35% of their disbursed loans. Experts warn that these waivers are detrimental to banking governance and overall sector stability.
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