A sharp escalation in non-performing loans (NPLs) within key sectors of the economy has heightened concerns over financial stability, investment flows, and future growth prospects. The latest data released by Bangladesh Bank indicate that the country’s banking sector is facing mounting pressure as defaulted loans continue to accumulate at an unsettling pace.
As of December 2025, the business and trade sector recorded an NPL ratio of 42 per cent—one of the highest levels observed in recent years. This sector alone accounted for Tk594,624.55 crore in outstanding loans, representing roughly 33 per cent of the total credit extended by banks. The scale of default within such a critical segment of the economy has raised serious questions about credit discipline and regulatory oversight.
Despite a slight improvement from September 2025, when total loans in the sector stood at Tk574,187 crore, the marginal decline in NPLs offers little reassurance. Economists caution that such elevated levels of bad loans can weaken banks’ lending capacity, discourage fresh investment, and slow economic momentum.
The industrial sector, which absorbs the largest share of bank lending at 43 per cent, also reflects significant stress. By December, total loans in this sector reached Tk764,117 crore, of which 30.8 per cent had turned non-performing. Although this marks an improvement from the 37 per cent NPL ratio recorded three months earlier, the figure remains considerably high and indicative of persistent structural challenges.
Key Loan Indicators by Sector (December 2025)
| Sector | Total Loans (Tk crore) | Share of Lending | NPL Ratio (%) | Change from Sept 2025 |
|---|---|---|---|---|
| Business & Trade | 594,624.55 | 33% | 42.0 | Slight decline |
| Industrial Sector | 764,117.00 | 43% | 30.8 | ↓ from 37% |
Banking professionals cite weak governance, inadequate due diligence, and political influence as major contributors to rising defaults, particularly in the industrial segment. Allegations persist that certain borrowers secure large loans through irregular means and subsequently transfer funds abroad, leaving banks with limited recovery options.
Conversely, industrialists highlight external economic pressures. The aftershocks of the COVID-19 pandemic have driven up production costs and disrupted supply chains, squeezing profit margins and undermining repayment capacity. These factors have collectively contributed to a growing pool of distressed loans.
A senior banking executive warned that sustained high levels of NPLs could precipitate a broader financial strain. Liquidity shortages may emerge, forcing banks to tighten lending standards and increase interest rates to mitigate risks. Such measures, in turn, could dampen private sector investment and hinder job creation.
Analysts emphasise that without comprehensive reforms—including stricter credit assessment, enhanced regulatory enforcement, and more effective loan recovery mechanisms—the burden of bad loans could pose a significant threat to macroeconomic stability. The current trajectory suggests that urgent policy intervention will be essential to restore confidence in the banking system and safeguard long-term economic growth.