The number of bank loan defaulters with outstanding loans of less than Tk 10 million (Tk 1 crore) increased by nearly 2.4 million over the past year, highlighting growing financial stress among small borrowers, according to the latest Bangladesh Bank report.

The central bank said the number of such defaulters rose from 2.163 million at the end of March 2025 to 4.543 million by the end of March 2026, more than doubling within a year.

Bangladesh Bank attributed the sharp increase to the deterioration in the quality of retail loans, persistently high inflation, rising household debt burdens, slower SME activities, and weakening repayment capacity among farmers and small business owners.

According to the report, the banking sector’s total outstanding loans stood at Tk 17.84 trillion at the end of March 2026, with the overall default loan ratio reaching 32.7%.

Loans of up to Tk 10 million accounted for approximately Tk 4.10 trillion, of which 15% were classified as default. While the default ratio by value remains relatively lower than larger loans, the number of borrowers falling into default has increased rapidly.

In contrast, loans exceeding Tk 500 million (Tk 50 crore) totaled about Tk 5.76 trillion, with 42.5% classified as default. The number of large loan defaulters increased from 1,478 to 2,035 during the same period.

The report also showed default rates of 26.5% for loans between Tk 10 million and Tk 100 million, 45% for loans between Tk 100 million and Tk 200 million, nearly 36% for loans between Tk 200 million and Tk 300 million, around 39% for loans between Tk 300 million and Tk 400 million, and about 45% for loans between Tk 400 million and Tk 500 million.

Sector-wise, the trade and commerce sector recorded the highest default rate at 44%, followed by the industrial sector at nearly 32% and the CMSME sector at 34%. Within the CMSME segment, cottage industries posted the highest default rate at approximately 53%.

Bangladesh Bank warned that although large defaulted loans pose greater financial losses, the rapid rise in defaults among small-value loans is emerging as a new warning sign for the banking sector.

Masrur Riaz, Chairman of Policy Exchange Bangladesh, said prolonged high inflation, rising living costs, and the slowdown in small businesses have weakened the repayment capacity of small borrowers.

Janata Bank Managing Director Mujibur Rahman said defaults are increasing not only among large borrowers but also in the agriculture and SME sectors, adding that banks are trying to regularize such loans under special Bangladesh Bank policy measures.