Loan rescheduling was a key tool used during Sheikh Hasina’s autocratic regime to conceal default loans, despite non-payment, and present a healthier banking sector. Since 2012, the Bangladesh Bank introduced policies to hide defaults, fostering a non-payment culture. In 2019, the relaxation of loan classification rules allowed for extended repayment periods, deviating from international practices, which worsened the banking crisis.
By 2023, real default loans, which had been concealed, surged to Tk2.84 lakh crore, exposing the true state of the banking sector. The government’s repeated amendments to the Bank Company Act, which favored defaulters and bank owners, worsened corporate governance and default rates. The IMF’s pressure in 2023 forced the Bangladesh Bank to classify rescheduled loans as distressed assets, revealing a true financial sector crisis of Tk4.75 lakh crore.
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