Bangladesh’s banking sector faces a growing crisis, with non-performing loans (NPLs) reaching Tk 3.45 trillion by the end of 2024, accounting for 20.20% of total loans. Despite having court decrees in their favor, banks and non-bank financial institutions (NBFIs) struggle to recover default loans due to challenges in selling mortgaged properties at auction. Only 3-4 properties are successfully auctioned annually out of 1,500-2,000 cases processed in Dhaka’s four money loan courts, with 23,782 cases pending nationwide as of December 2024. Legal complications and low auction prices deter buyers, leading to prolonged NPL accumulation. Affected by this are 3,391 cases pending for more than five years. Experts recommend that banks lower auction prices to stimulate interest and urge Bangladesh Bank to implement special initiatives to improve loan recovery. This inefficiency in recovering default loans contributes to the mounting financial strain within the sector.
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