After the change of government, the true extent of non-performing loans (NPLs), kept hidden for years, has come to light, prompting the central bank to instruct commercial bank managing directors to implement restructuring and partial write-off measures. At a meeting with bankers, Bangladesh Bank Governor Ahsan H Mansur stated that NPLs had reached Tk 6.44 trillion by September, nearly 36% of all outstanding loans and the highest ever recorded in the country.
In June the figure stood at Tk 2.11 trillion, and in December last year Tk 3.45 trillion. Once the new government took office, previously hidden loan risks began to surface. On 4 December, Bangladesh Bank approved a partial write-off scheme for impaired and loss-category loans with little chance of recovery. The intention is to reflect a more accurate risk profile and lighten banks’ balance sheets.
Sirajul Islam, Executive Director of the central bank, told TBS that MDs were asked to follow policy directives strictly to support financially stressed borrowers. He also mentioned that the governor placed special emphasis on applying partial write-offs where necessary.
A private bank MD said the governor advised offering rescheduling opportunities to borrowers willing to regularise their debts. Agricultural credit disparity was another major topic, as the sector contributes 14–15% to GDP but receives only 2% of total loans. Banks were urged to raise this to above 10%.
The governor also suggested targeting 20% annual growth in CMSME lending and announced that provisioning requirements would be lowered from 1% to 0.5%. Concerns were raised about delays in increasing personal loan limits and credit card limits, prompting the governor to instruct deputy governors to expedite the issue.
Despite approval of long-term restructuring schemes, NPLs continue to grow. Bankers argue that a two-year grace period and minimal down payment increase risks to depositors. Many influential borrowers get approval but avoid further negotiation. Businesses counter that banks themselves obstruct implementation. They insist that without fixing policy flaws, NPL risks will not diminish.
AJ