The Association of Bankers, Bangladesh (ABB), the premier organisation representing the nation’s senior banking executives, has submitted a comprehensive set of proposals to tackle the escalating problem of non-performing loans (NPLs) in the country’s banking sector. The recommendations, formally sent to the Governor of Bangladesh Bank, Ahsan H. Mansur, aim to curb defaults, enhance cash recovery, and ensure greater accountability among borrowers.
The proposals were drafted following a meeting with the central bank on 12 November last year and were signed by Masrur Arefin, Chairman of ABB and Managing Director of City Bank. They focus on three main areas: reduction of bad loans, facilitation of cash recovery, and streamlined procedures for collateral disposal.
Table of Contents
Key Recommendations to Reduce Non-Performing Loans
Partial Write-Offs: Allow partial write-offs of NPLs in accordance with international banking standards.
Collateral Monetisation: Immediate cooperation from relevant authorities for the cash realisation of pledged shares.
Exemptions: Waive interest on personal loans, housing loans, and micro-enterprise loans in cases of death, natural disasters, or serious illness.
Measures to Enhance Cash Recovery
Travel Restrictions: Prohibit defaulters from travelling abroad without court permission.
Public Disclosure: Permit banks to publicly disclose the names and photographs of defaulting borrowers.
Business Conduct Restrictions: Bar defaulters from contesting elections in any business association.
Proposals on Collateral Disposal
Tax Incentives: Withdraw income tax and VAT on bank-auctioned assets.
Buyer Benefits: Offer tax relief or other incentives to auction purchasers.
Administrative Simplification: Remove the requirement for district commissioner approval.
Official Cooperation: Ensure maximum support from sub-registry offices.
Land Survey Facilitation: Provide assistance with land revenue and survey completion.
Automatic Transfer: Enable automatic transfer of ownership to the bank via court proceedings.
Legal and Judicial Reforms
Allow easy access to defaulters’ and guarantors’ property and financial information.
Define specific down-payment conditions when filing court applications.
Establish clear rules for CIB reports and stay orders.
Set up separate financial courts in districts with high NPLs.
Enable immediate arrest orders at police stations for defaulters.
Eliminate mandatory personal appearances for court proceedings.
Measures to Prevent Future Defaults
Publish lists of land surveyors and appraisers through the central bank.
Facilitate easy verification of collateral assets.
Develop and maintain a comprehensive database of personal assets.
Current NPL Scenario (as of September 2025)
| Sector | Total Loans (BDT crore) | Non-Performing Loans (BDT crore) | NPL Ratio (%) |
|---|---|---|---|
| Banking | 18,003,840 | 6,50,000 | 35.73 |
According to industry sources, nearly one-third of all bank loans in Bangladesh are currently non-performing. Banking experts note that during previous government regimes, there was a tendency to underreport NPLs. However, the current figures reflect the true extent of the problem. Analysts have warned that without effective implementation of these measures, the NPL ratio is likely to rise further, posing a significant risk to the stability of the financial sector.