Non-performing loans (NPLs) in Bangladesh’s banking sector have surged past Tk 3.45 trillion, accounting for 20.20% of total outstanding loans by the end of 2024, per Bangladesh Bank data. This marks a sharp rise from 9% a year earlier.

The increase follows changes in overdue status counting, with term loans now classified as NPLs after six months instead of nine. The threshold will be further reduced to three months from March 2025, leading to an anticipated rise in bad loans.

State-owned commercial banks recorded the highest NPL ratios, with classified loans reaching Tk 1.37 trillion, or 42.80% of their total loans. Private banks also saw a surge, with NPLs hitting Tk 2 trillion, up from Tk 709.82 billion a year ago. Foreign banks, however, experienced a slight decline in bad loans.

Bangladesh Bank Governor Dr. Ahsan H. Mansur warned that the NPL crisis would intensify as regulatory data now reflects actual figures. He noted that ongoing reforms could further expose the scale of bad loans.

Bankers fear rising NPLs will strain liquidity, limit credit supply, and impact profitability. Mutual Trust Bank CEO Syed Mahbubur Rahman suggested that the next government’s successful policy implementation could help stabilize the sector.