Published: 11:46 PM, 19 May 2026 Last Update: 12:01 AM, 20 May 2026
Shadow of Greece in Banking Sector!
Amir Mohammed Khosru
There is an eternal rule in economics-crises never arrive suddenly; they continue to send signals beforehand. Those who fail to understand those signals in time ultimately face a devastating economic collapse like Greece. In recent times, the growing concern among economists regarding the trajectory of Bangladesh's banking and financial sector bears a strange and alarming resemblance to the Greek economic crisis of a decade ago. By analyzing how Greece reached the edge of the abyss and the extreme price it had to pay to recover, alongside Bangladesh's current reality, a major warning and necessary course of action become clear before us.
To understand how the carefully arranged garden of Greece's self-reliant economy turned into a desert, we need to look back. In 2007, Greece's economy appeared quite strong. At that time, the country's Gross Domestic Product (GDP) stood at 351 billion dollars. Real per capita GDP was 30,800 dollars. On the surface, Greece's position on the global stage as a developed and prosperous nation seemed well established. However, behind this prosperity were hidden structural weaknesses, excessive debt, and extreme disorder in the financial sector.
The history that followed was nothing but decline. After more than a decade of debt crisis and recession, Greece's real per capita GDP fell to 24,725 dollars by 2024. In other words, instead of improving living standards over two decades, the country experienced a major deterioration. Greece's GDP has now shrunk to 282 billion dollars. A fall in GDP from 351 billion to 282 billion dollars is not an ordinary recession-it represented the collapse of an entire economic structure.
The main catalyst behind this catastrophe was Greece's banking and financial sector. In 2007, Greece had a total of 64 banks and financial institutions. But due to weak supervision, indiscriminate loan disbursement under political influence, and lack of good governance, the non-performing loan (NPL) ratio in the banking sector jumped to 49 percent within a few years. That meant nearly half of all loans distributed by banks became unrecoverable. The consequences were extremely brutal. Banks lost the ability to return depositors' money, and many failed to repay customer deposits. A severe liquidity crisis emerged, forcing most banks to shut down while ATMs became ineffective. People took to the streets because they could not withdraw their hard-earned savings. To stabilize the situation, nearly 57 billion euros worth of bad loans were securitized and removed from banks' balance sheets, placing a huge burden on the economy.
To survive the crisis, banks were compelled to close and merge. As a result, the number of banks and financial institutions was dramatically reduced from 64 to only 4. After nearly two decades of strict reforms, harsh conditions imposed by the International Monetary Fund (IMF) and the European Union, and an enormous tax burden on citizens, Greece finally managed to reduce its NPL ratio to 3.3 percent by December 31, 2025. But an entire generation had to pay a painful price for that recovery.
Looking at Greece's past, one can see a dangerous parallel in Bangladesh's current banking and financial sector. According to recent data from Bangladesh Bank, the country's financial indicators are becoming even more complex than those seen during the early stages of Greece's crisis. The condition of Bangladesh's banking sector is extremely fragile. Currently, there are 62 scheduled banks in the country, nearly half of which are in severely weak condition. The same symptoms seen in Greece are visible here-nearly a dozen banks are unable to return depositors' money. In other words, public confidence in banks is now standing at the edge of collapse. In addition, 24 banks are suffering from capital shortages.
Greece VS Bangladesh
Key Indicators Comparisons
Indicators Greece
(Crisis Period) Bangladesh
(Current Situation)
Number of Banks 64 62
Non-performing Loan (NPL) Ratio 49% 60.60%
Non-bank Financial Institutions NPL Ratio - 37.11%
Government debt
(Foreign Portion) Very High
(Euro Zone Crisis) Tk. 11.5 lakh crore
(out of 24 lakk crore)
Most alarmingly, the official non-performing loan ratio in Bangladesh's banking sector has now reached 30.60 percent. The real picture may be even worse. The non-bank financial institutions and insurance sectors are also facing severe collapse. Their condition is even more alarming. Of the country's 35 financial institutions, more than 20 are struggling for survival. Due to severe irregularities and corruption, initiatives have already been taken to shut down 9 financial institutions. The NPL ratio in this sector has reached an unbelievable 37.11 percent. Meanwhile, among the country's 82 insurance companies, nearly one-third are in extremely fragile condition and unable to pay customers' insurance claims.
Greece has already shown what happens when the balance between domestic and foreign debt collapses. Bangladesh's current government debt stands at nearly Tk. 24 lakh crore, of which about Tk. 11.5 lakh crore is foreign debt. A large portion of the country's revenue earnings is now being consumed by debt servicing and interest payments, negatively affecting development and social protection programs.
Bangladesh now requires tough measures to survive. A comparative analysis of Greece's crisis and Bangladesh's present reality proves that we are no longer at the stage of merely issuing warnings; rather, we are already inside the crisis itself. No patchwork policy or temporary remedy will work anymore. What is needed is a specific, strict, and politically independent master plan.
As the regulatory authority of the banking sector, Bangladesh Bank must function as a fully independent and autonomous institution. The culture of repeated loan restructuring and special facilities for defaulters must stop immediately. If any bank's board of directors violates the law or approves anonymous loans, criminal cases should be filed against the directors and management, ensuring exemplary punishment.
Bangladesh currently lacks the economic depth and capacity to operate 62 banks. Just as Greece reduced 64 institutions to 4, Bangladesh should quickly merge extremely weak banks, capital-deficient banks, and banks unable to repay depositors with stronger institutions. Completely bankrupt institutions should be liquidated or shut down while ensuring protection for depositors.
The current 30.60 percent NPL ratio is like poison for a functioning economy. Special tribunals should be formed to ensure speedy trial and recovery of defaulted loans. Top defaulters must face travel bans, passport cancellations, and confiscation of all domestic and foreign movable and immovable assets, which should then be auctioned to recover bank funds. Imprisonment for willful defaulters is essential.
The process of canceling or merging the licenses of more than 20 struggling non-bank financial institutions must be completed quickly. A clear roadmap should be prepared regarding how depositors of the 9 institutions marked for closure will get their money back. To increase accountability in the insurance sector, the Insurance Development and Regulatory Authority (IDRA) must be strengthened further.
The rise of foreign debt to Tk. 11.5 lakh crore is by no means comforting. From now on, foreign borrowing for less important or less profitable mega projects must stop completely. To strengthen foreign currency reserves, strict enforcement against hundi must be ensured alongside increasing remittance and export earnings. Extreme austerity in government expenditure has become indispensable. Greece eventually learned from its crisis, but far too late. As a result, ordinary citizens had to endure years of extreme unemployment, pension cuts, and heavy taxation during the reconstruction of the economy. Bangladesh today stands exactly at the same crossroads where Greece made the wrong decisions in 2007.
Our economy has not yet completely collapsed, but the disease of decay has penetrated deep inside. If strict surgical reforms are not implemented immediately in the banking and financial sector, ordinary citizens of this country may also have to stand in long queues before ATM booths within the next few years, desperately waiting for their own savings. Policymakers must remember-economic reform is not a matter of political compromise; it is a battle for national survival. Work must begin today with the firm determination that the tragedy of Greece must never become the future of Bangladesh.
Amir Mohammed Khosru is a
banker and a columnist.
