The non-performing loans (NPLs) in state-owned banks in Bangladesh continue to escalate, despite oversight from Bangladesh Bank, appointments of former and current bureaucrats as board directors, and the presence of central bank-appointed observers. According to Bangladesh Bank sources, NPLs have increased in all state banks, except for Agrani Bank and Bangladesh Development Bank PLC (BDBPL), during the January-March period.
In compliance with the International Monetary Fund’s (IMF) loan conditions, Bangladesh Bank has directed four state-owned banks—Sonali Bank, Agrani Bank, Janata Bank, and Rupali Bank—to reduce their NPLs to 12% by June. However, by March, none of these banks had met this target, due to the absence of specific strategies to reduce NPLs. Consequently, most state banks have seen an increase in their NPLs.
As part of the conditions for the IMF’s $4.7 billion loan to Bangladesh, the organization has mandated the reduction of NPL rates in the banking sector to 10% by 2024.
According to central bank data, Sonali Bank’s NPLs increased from BDT 13,340 crore in December to BDT 14,988 crore in March, a rise of BDT 1,648 crore over three months. Janata Bank’s NPLs increased by BDT 5,486 crore, reaching BDT 30,495 crore. Rupali Bank’s NPLs rose by BDT 314 crore to BDT 10,357 crore, and BASIC Bank’s NPLs grew by BDT 93 crore to BDT 8,297 crore.
Conversely, Agrani Bank saw a reduction of BDT 612 crore in its NPLs, bringing the total to BDT 20,864 crore. BDBPL also reported a decrease of BDT 120 crore, lowering its NPLs to BDT 873 crore.
By the end of March, Sonali Bank’s NPL ratio stood at 14.84%, Janata Bank’s at 31%, Agrani Bank’s at 28%, Rupali Bank’s at 21%, BDBPL’s at 33.97%, and BASIC Bank’s at 63%.
Officials from Bangladesh Bank have stated that most major borrowers of state-owned banks are closely affiliated with the government and hold various positions, which has allowed their loans to evade proper oversight. Some loans that were previously performing well have now become non-performing. The new rules for identifying NPLs are expected to further increase the volume of such loans in the future.
