Published: 12:40 AM, 18 May 2026
Most Banks Can Hardly Pay Back Depositors' Savings: Experts
From Left: Dr. Hussain Zillur Rahman, Professor Anu Muhammad, Dr. Iftekharuzzaman and Professor Dr. Rumana Haque. AA
For ordinary people, even banks are no longer safe for their savings, alongside leasing companies, the stock market, insurance, and cooperatives. There is no security for investment or savings. Except for a handful of banks, most depositors are now worried not only about profits but also about whether they will get their principal back.
According to data from Bangladesh Bank, the country's banking sector currently has defaulted loans totaling BDT 5,57,000 crore, which is 30.60% of the total loans disbursed. Furthermore, the real picture of non-performing loans (NPLs) is even more alarming.
Many banks have concealed the true situation for years. Except for a few banks, the condition of most is dire. In 12 banks, the default rate has exceeded 70%. Depositors in many banks are facing difficulties when trying to withdraw their money. Among the 62 banks, 66% are in weak financial condition. Already, 23 banks face a capital shortfall of nearly BDT 2,82,000 crore. As a result, depositors and small savers have lost confidence in the banking sector.
Dr. M.K. Mujeri, former Chief Economist of Bangladesh Bank, said on Wednesday that all financial sectors-including banks, non-bank financial institutions (NBFIs), the stock market, and insurance-are now facing a crisis of trust. People are afraid to deposit money in these institutions. There has been widespread looting and massive fraud in banks. In some banks, the default rate has exceeded 80%, leaving the condition of most banks poor. People no longer feel safe depositing money, which is a negative signal for the economy.
He noted that certain identified groups have embezzled money from banks and are themselves the owners of those banks. There is also alleged collusion from regulatory authorities in the looting of bank funds. The situation in NBFIs is even worse, and similar conditions prevail in the stock market and insurance sectors. Overall, this has created a severe trust deficit in the entire financial sector.
Dr. Mujeri suggested two steps to restore trust: first, those involved in fraud should be brought to justice, and second, the embezzled funds should be recovered.
Dr. Moinul Islam, former president of the Bangladesh Economic Association, told Jugantor that this trust crisis is not trivial; it is deep-rooted. People's confidence in the entire financial sector has been eroded, and recovery will not be easy. He warned that without proper practices in the financial sector, problems will worsen. Dr. Islam also said that recent actions, such as the removal of former Bangladesh Bank Governor Dr. Ahsan H. Mansur, have further shaken public confidence in banking.
Arif Hossain Khan, Executive Director and Spokesperson of Bangladesh Bank, said that restoring public confidence is essential to solving problems in the financial sector, and Bangladesh Bank is actively working toward this. For instance, a "Stolen Asset Recovery" committee has been formed to recover large-scale embezzled funds. Regular meetings are being held with banks to promote good governance, and observers have been appointed to their boards.
Bangladesh Bank is also making every effort to prevent the creation of new non-performing loans. Not only large clients but also smaller borrowers have defaulted on loans. The reasons behind their defaults are being reviewed to determine whether the loans were justified. In other words, Bangladesh Bank is trying its best to manage the situation.
According to the latest data, the condition of non-bank financial institutions is extremely alarming. Twenty institutions are in the "red zone," nine of which were previously slated for closure by Bangladesh Bank, though three have been removed from that list. Closure announcements for six institutions may still come.
More than 12,000 depositors of these six financial institutions-FAS Finance, Premier Leasing, Far East Finance, Aviva Finance, Peoples Leasing, and International Leasing-have protested to recover their deposits. These institutions have disbursed loans totaling nearly BDT 76,000 crore, of which approximately BDT 28,000 crore are non-performing, representing 36% of total disbursed loans.
Former Adviser to caretaker government Dr. Hossain Zillur Rahman said that loan scammers for the most part were not subjected to exemplary punishment which is why the banking sector is not being able to recover from woes. He further said that the financial regulators could not play their role efficiently to recover defaulted loans from influential clients.
Professor Anu Muhammad, Jahangirnagar University said that no governments during last few decades could take strong measures against powerful financial thugs. He blamed the regulatory authorities for always having a soft approach to banking law violators.
Dr. Iftekharuzzaman, Executive Director of Transparency International Bangladesh (TIB) said that there are very little instances of uncompromising crackdown on financial fraudsters and banking malpractices in Bangladesh. Rather in many cases mega defaulters were given undue privileges and loan rescheduling facilities were granted to defaulters over and over again, Dr. Iftekharuzzaman stated.
On the other hand, Professor Dr. Rumana Haque, Economics Department of Dhaka University said that the country's economic dimensions cannot be strengthened without materializing indispensable reforms in the banking sector of Bangladesh. She expressed hope that the Financial Institutions Division and Bangladesh Bank will make a move quickly to fortify the safety of general depositors.
