The International Monetary Fund (IMF) is set to investigate years of alleged concealment of non-performing loans (NPLs) in Bangladesh’s banking sector, aiming to determine whether the cover-up resulted from deliberate manipulation or systemic negligence.

Officials at Bangladesh Bank (BB) confirmed to UNB on Wednesday that the IMF has formally sought clarification on how such extensive financial irregularities went undetected during repeated inspections.

The issue dominated a meeting between an IMF delegation and central bank officials on Tuesday, where the global lender pressed for explanations about the concealment and inconsistencies in reported loan defaults.

“With the change of administration, that veil of secrecy appears to have been lifted. Consequently, the latest data reveal a dramatic surge in NPLs,” said a senior BB official who asked not to be named.

Newly disclosed figures show the total volume of bad loans has climbed to over Tk 6.5 lakh crore, up from around Tk 4 lakh crore a year earlier. The default rate in state-owned banks has surpassed 40%, while private lenders now report rates above 10%.

The revelations pose a major challenge to the IMF’s $4.7 billion loan programme, which requires state-owned banks to bring NPLs below 10% by 2026.

The IMF’s inquiry will focus on the role of bank officials, potential misuse of legal loopholes, failures in the inspection system, and whether regulators were negligent or complicit in the large-scale misreporting of financial data.