Cumulative written-off loans in Bangladesh’s banking sector surged past Tk 818.63 billion as of March 2025, Bangladesh Bank data shows.

State-owned commercial banks accounted for Tk 258.39 billion of the total, while private commercial banks wrote off Tk 530.28 billion.

Foreign banks and specialised banks followed with Tk 23.81 billion and Tk 6.13 billion, respectively.

Despite these write-offs, the net outstanding balance remains high at Tk 634.71 billion, with private banks alone holding Tk 428.75 billion. Bankers warn this trend could further erode credit discipline.

Loan write-offs are allowed under Bangladesh Bank rules, introduced in 2003 to clean up overstated balance sheets. Banks must maintain 100% provisioning for such loans and report them in a separate ledger.

However, experts argue that this practice, if overused, risks concealing the real extent of non-performing loans (NPLs).

“Loan write-offs are expected to grow further as NPLs continue to rise,” said M Masrur Reaz, chairman of Policy Exchange Bangladesh. He cited stronger reporting standards and the likely entry of asset management companies in bank restructuring as key drivers.

Reaz stressed that robust risk management, proper oversight by Bangladesh Bank, and better governance are essential to reversing the trend.