Banks in Bangladesh saw a significant increase in default loans during the first three months of 2023, with an accumulation of Tk 10,964 crore. Official figures from the Bangladesh Bank revealed that non-performing loans (NPLs) stood at Tk 131,621 crore as of March 31, 2023. This reflects a 9% increase from the previous quarter and a substantial 16% rise from the same period last year.
The NPL ratio accounted for 8.8% of the outstanding loans in the banking system, amounting to Tk 14,96,346 crore in March 2023. This ratio was 8.16% in December and 8.53% in March of the previous year. The NPL figure reported in the first quarter of 2023 is the second-highest in the history of Bangladesh’s banking sector, trailing only behind the Tk 134,396 crore reported in the July-September quarter of 2022.
The defaulted loans were spread across various banks. State-run banks held Tk 62,690 crore in bad loans, marking a 19% increase year-on-year. Private commercial banks held Tk 65,881 crore in defaulted loans, reflecting a 14% rise. Additionally, NPLs at foreign banks increased to Tk 3,042 crore from Tk 2,885 crore compared to the previous year.
These numbers indicate the severity of the situation and the challenges faced by Bangladesh’s banking sector. Efforts to address this issue, such as improved corporate governance, cautious loan disbursement, and the identification of willful defaulters, are crucial to mitigate the adverse effects of elevated NPLs.
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