Rupali Bank’s Debt Burden Continues Rising

The stock of forced loans at Rupali Bank climbed to $1.87 billion by the end of December 2025, reflecting a sustained rise over recent years and prompting concern over the bank’s financial condition, according to findings from the Bangladesh Bank.

Central bank data shows that forced loans increased by 91.59% compared with 2021, when the amount stood at $976 million. The upward trajectory continued through subsequent years, reaching $1.23 billion in 2023 and $1.49 billion in 2024 before rising further in 2025.

Forced Loan Trend

Forced loans arise when importers fail to settle obligations under letters of credit within the agreed timeframe. In such instances, the bank settles the payment with the foreign supplier and records the amount as a loan to the importer. Officials indicate that the increase in such loans reflects repeated failures by clients to meet payment deadlines, which in turn affects liquidity and weakens the quality of assets.

Economists consider a rise in forced loans to be a significant warning sign, as it indicates repayment difficulties among borrowers and increases the probability of these exposures becoming non-performing. Dr Md Ezazul Islam, Director General of the Bangladesh Institute of Bank Management, stated that the trend demonstrates underlying financial fragility. He noted that when forced loans approach $2 billion, it implies that the bank has already met substantial external obligations without corresponding recovery. He also stressed that stronger governance is required to prevent misuse and reduce risk.

According to a senior official at Rupali Bank, a large portion of these loans is associated with the garment sector, where payments linked to import financing have not been settled on time.

The inspection further identified weaknesses in foreign exchange operations. The bank reportedly disbursed $2.20 billion to overseas entities against import bills but failed to produce bills of entry confirming the arrival of goods. A significant volume of such documentation remains outstanding, raising concerns over potential irregularities and unverified outflows.

In March, Bangladesh Bank declined an application by the lender to open a new authorised dealer branch in Rajarbagh, citing deficiencies in risk management. The decision followed a broader assessment of the bank’s foreign trade activities, which have shown a consistent decline.

Foreign Trade Indicators

The central bank reported that all major indicators linked to foreign exchange transactions have weakened over the period.

An inspection covering five authorised dealer branches identified 46 serious irregularities, including concealment of liabilities, extension of new facilities to defaulting clients, and the creation of forced loans without appropriate approval. The bank was rated “unsatisfactory” in internal control and compliance, credit risk management, and ICT security.

As of 31 December 2024, the bank’s non-performing loans stood at Tk21,358 crore, representing 41.60% of its total loan portfolio.

In response, a Rupali Bank general manager stated that approximately 95% of the outstanding bills of entry relate to imports by the Bangladesh Petroleum Corporation. Central bank officials attributed discrepancies partly to tariff valuation issues and confirmed that discussions involving the corporation and the National Board of Revenue are ongoing.

The bank also pointed to exchange rate fluctuations and disruptions following the Covid-19 period, including cancelled orders in the garment sector, as contributing factors behind delayed payments. It added that improvements in foreign exchange operations could help stabilise conditions.