Bangladesh has recorded the highest rate of defaulted loans among Asian countries, according to a recent report by the Asian Development Bank (ADB). The report, which analyzes key financial indicators across Asia and the Pacific, attributes the surge in Bangladesh’s defaulted loans to growing political and economic instability since August last year.

Following the fall of the previous government, the country’s banking sector has seen a rapid increase in loan defaults, particularly among businesspeople affiliated with the former ruling Awami League and their close associates. As a result, the default loan rate in Bangladesh has jumped from 12% to 28% in just one year, meaning more than a quarter of all distributed loans are now classified as non-performing.

The ADB’s data reflects the status of loans up to the end of 2023, when Bangladesh’s official default rate was 9.6%, the highest among South Asian nations. The report also notes a consistent upward trend in Bangladesh’s default loan ratio over the past three years — from 8% in 2021 to 8.7% in 2022, and 9.6% in 2023. The current unofficial estimate of 28% reflects more recent figures amid political transition and weaker banking oversight.

In contrast, neighboring countries such as India, Bhutan, and Maldives have reported declines in their default loan ratios. For instance, India’s default rate fell from 7.9% in 2020 to 6.2% in 2023, while Maldives made a dramatic improvement from 18.8% to 8.3% over the same period.

The only countries approaching Bangladesh’s current default levels are Kyrgyzstan, where the rate declined from 12.5% in 2022 to 8.9% in 2023, and Nepal and Sri Lanka, which also reported rising trends but remain far below Bangladesh’s rate.

The report warns that the continued rise in defaulted loans could further destabilize Bangladesh’s financial system, reduce investor confidence, and hinder economic recovery. Experts have called for urgent reforms in the banking sector, increased accountability in loan distribution, and strong political will to restore discipline in financial governance.