Bangladesh’s financial sector faced a challenging year with soaring inflation, liquidity shortages, panic withdrawals, exchange-rate volatility, and rising non-performing loans (NPLs). Leveraged and insider lending, along with control by embattled oligarchs, led to significant bank money siphoning. This eroded depositor confidence, causing panic withdrawals and operational difficulties for banks. The central bank injected over Tk 250 billion to address liquidity crises. Following political upheaval and a change in government, the central bank dissolved boards of struggling banks and formed taskforces for sector reform. The policy rate increased by 225 basis points to 10% to combat inflation. NPLs grew by Tk 1.39 trillion, reaching Tk 2.85 trillion. The forex market saw extreme volatility, with the exchange rate against the US dollar exceeding Tk 127. Positive developments included the removal of lending rate caps, prompted by the IMF, to reintroduce market-based interest rates.
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