Six state-owned commercial banks in Bangladesh recovered only a fraction of their written-off loans against government targets in the first quarter of 2024, according to data from Bangladesh Bank.

Former central bank governor Salehuddin Ahmed criticized the banks for their lack of seriousness in loan recovery efforts.

The banks, which are either fully or majority-owned by the government, include Sonali Bank, Bangladesh Development Bank Limited (BDBL), Basic Bank, Agrani Bank, Janata Bank, and Rupali Bank.

From January to March, Sonali Bank, BDBL, Basic Bank, Agrani Bank, and Janata Bank recovered just 0.8%, 0.15%, 1.89%, 3.50%, and 4.57% of their targets, respectively. Rupali Bank, however, managed to collect 53.86% of its target during the same period.

As of March 2024, the total amount of written-off loans by state-owned commercial banks stood at Tk 181.17 billion, slightly down from Tk 182.46 billion in March 2023.

The December 2023 breakdown of written-off loans was as follows: Sonali Bank with over Tk 66.11 billion, Janata Bank Tk 32.42 billion, Agrani Bank Tk 39.41 billion, Rupali Bank Tk 5.67 billion, BDBL Tk 13.27 billion, and Basic Bank Tk 24 billion.

The six banks are heavily burdened by a large volume of non-performing loans (NPLs), an earlier stage before loans are written off. As of March, these banks had Tk 858.70 billion in NPLs. Persistent NPLs can lead to further loan write-offs, exacerbating the financial strain on the banks.

The Bangladesh Bank and other authorities have expressed concern over the increasing amount of written-off loans and bad debts in the banking sector. The central bank has repeatedly urged state-owned commercial banks to enhance their efforts in recovering classified loans.

Sources pointed out that influential individuals often secure loans from state-owned banks without proper scrutiny. This lack of due diligence leads to a high proportion of loans becoming classified and difficult to recover.

Furthermore, some businesses and entrepreneurs face difficulties in repaying loans and accrued interest due to financial challenges.