Published: 08:27 AM, 08 December 2025 Last Update: 08:39 AM, 08 December 2025
Big Stumbling Stones Identified in Banks' Target to Recover Siphoned Off Loans
Bangladesh Bank (BB) authorities have instructed the commercial banks to execute concrete steps to curtail escalating load of NPLs (non-performing loans) on the banking industry by the end of this December. To attain this target, the central bank high-ups suggested top executives of all scheduled banks to implement all the instructions the banking regulator recently issued regarding the policy support to revive the ailing business entities and to retain partial write-off facility to clean the balance sheets of banks. The central bank top management led by its governor Dr. Ahsan H. Mansur made the instructions at the bankers' meeting with the top executive of the country's commercial banks at BB headquarters on Sunday.
The Asian Age correspondent spoke to a broad number of the Managing Directors and Chief Executive Officers (CEOs) of the scheduled banks to get categorical ideas about the outcomes of yesterday's meeting but all of the top bankers agreed to express their opinions on condition of anonymity.
A Managing Director and CEO of a private bank said that Bangladesh Bank Governor told top bankers that the ratio of classified loans in the banking industry rose to as high as nearly 36 per cent until September last, which is a serious point for everyone to worry about. The Governor instructed the bank executives to pay sharp attention to NPL management and to carry out all the directives the regulator recently issued through circulars regarding policy support for rejuvenating the troubled business enterprises and partial write-off facility for the banks. "If the banks implement the instructions properly, a significant volume of NPLs is expected to come down by the end of this December," the central bank Governor was quoted as saying by a number of top bankers.
Another high-profile official of a private bank said that they raised the problem that arises in terms of providing policy support because a significant number of people coming to get the policy support do not have the capacity even to pay 2.0 percent down payment, which is mandatory. At the same time, this top banker said that the commercial banks need to see the cash flow of the policy-support-seekers for the next 10 years before approving the facility to them. "The hardcore ground reality is the majority of them do not have cash flow, which needs to be certified by a registered auditor. In fact, most of them are not eligible to get such support," this top executive said. "If we allow them based on fictional cash-flow calculations, we would put into fresh problems, which the bankers don't want," he further said.
Apart from non-performing loans (NPLs), another bank's chief executive officer unveiled that they also requested the regulator to reduce the existing provisioning margin of 1.0 percent in terms of financing SMEs. Earlier, the provisioning requirement was 0.25 per cent which was enhanced to 1.0 percent few months ago. The bankers also requested the central bank to align the nano-loan with CIB (credit information bureau).
The central bank also ordered the banks to spotlight higher focus on digital transformation to ensure cashless society, SME and agro-financing. The volume of classified loans in the banking sector rose to Tk 6.44 trillion by end of September last which was 35.73 percent of the loans disbursed by the banking system. The figure was Tk 4.20 trillion by March 2025.
Founding chairman of Policy Exchange Bangladesh M Masrur Reaz commented that it is practically difficult to pull down the existing magnitude of defaulted loans because a significant portion of the money is gone to ghosts or weak companies and a part of those was laundered to overseas locations. If the bank executives become careful with NPL management through ensuring credit governance and properly handle risk management, the fresh flow of the possible classified loans can be avoided, Masrur Reaz said.
Expressing concern over delay in implementing various institutional and legal reforms like expediting money loan court and out-of-court resolutions and introduction of distressed management companies, Masrur Reaz said "It has been more than 15 months since the interim government has taken power. I think these reform measures should have been duly taken care of by this time".
