Published: 12:18 AM, 11 October 2026
BB outlines short, mid, long-term plans to reduce NPLs
The Bangladesh Bank has undertaken short, medium and long-term measures to reduce non-performing loans (NPLs) alongside strengthening credit discipline and improving governance in the country's banking sector.
The central bank has taken a number of measures to accelerate recovery of classified loans, strengthen banks' credit risk management and establish a more disciplined lending culture, according to a report presented at the fourth meeting of the Parliamentary Standing Committee on the Ministry of Finance.
The committee, at its fourth meeting recently held at the Jatiya Sangsad Bhaban with its chairman Mushfiqur Rahman, MP, in the chair, stressed ensuring transparency, accountability and economic stability in the country's financial institutions, particularly banks.
As part of its short-term plan covering one year, Bangladesh Bank will hold quarterly discussions with the senior management of banks where the classified loan ratio exceeds 10 percent. The discussions will identify obstacles to loan recovery and require the concerned banks to prepare action plans to address those problems.
The central bank will also review the recovery progress of the top 20 defaulted or classified borrowers at every bankers' meeting.
It plans to formulate guidelines on NPL resolution strategy for banks with high classified-loan ratios and update the Credit Risk Management Guideline.
The central bank also plans to implement loan classification and provisioning based on Expected Credit Loss (ECL) in line with IFRS 9. The measure aims to improve governance in banks' loan management and mitigate credit risks.
The legal aspects of publishing lists of defaulted and willful defaulters are also under review.
When sought comments, World Bank Division Director for Bangladesh and Bhutan Jean Pesme said the discussion aims to encourage the progressive exit of forbearance. "We think that more nuAA Business Desk
The Bangladesh Bank has undertaken short, medium and long-term measures to reduce non-performing loans (NPLs) alongside strengthening credit discipline and improving governance in the country's banking sector.
The central bank has taken a number of measures to accelerate recovery of classified loans, strengthen banks' credit risk management and establish a more disciplined lending culture, according to a report presented at the fourth meeting of the Parliamentary Standing Committee on the Ministry of Finance.
The committee, at its fourth meeting recently held at the Jatiya Sangsad Bhaban with its chairman Mushfiqur Rahman, MP, in the chair, stressed ensuring transparency, accountability and economic stability in the country's financial institutions, particularly banks.
As part of its short-term plan covering one year, Bangladesh Bank will hold quarterly discussions with the senior management of banks where the classified loan ratio exceeds 10 percent. The discussions will identify obstacles to loan recovery and require the concerned banks to prepare action plans to address those problems.
The central bank will also review the recovery progress of the top 20 defaulted or classified borrowers at every bankers' meeting.
It plans to formulate guidelines on NPL resolution strategy for banks with high classified-loan ratios and update the Credit Risk Management Guideline.
The central bank also plans to implement loan classification and provisioning based on Expected Credit Loss (ECL) in line with IFRS 9. The measure aims to improve governance in banks' loan management and mitigate credit risks.
The legal aspects of publishing lists of defaulted and willful defaulters are also under review.
When sought comments, World Bank Division Director for Bangladesh and Bhutan Jean Pesme said the discussion aims to encourage the progressive exit of forbearance. "We think that more needs to be done on the NPL to accelerate the NPL resolution mechanism by creating more incentives for the banks and the debtors to find out solution."
Under the medium-term plan ranging between two to three years, Bangladesh Bank will formulate a policy to provide special allowances to officials who work to recover classified loans and encourage them to intensify recovery efforts.
It will also review and update the existing policy for identifying and providing incentives to good borrowers - those who regularly repay their loans - with the aim of developing a sound credit culture in the country.
Under its long-term strategy ranging four to five years to contain the rising volume of defaulted loans, Bangladesh Bank plans to strengthen the overall credit management framework of banks and ensure greater discipline in loan sanctioning, monitoring, recovery and classification.
The long-term measures focus on addressing the structural weaknesses that contribute to the accumulation of non-performing loans rather than relying only on recovery drives after loans become classified.
eeds to be done on the NPL to accelerate the NPL resolution mechanism by creating more incentives for the banks and the debtors to find out solution."
Under the medium-term plan ranging between two to three years, Bangladesh Bank will formulate a policy to provide special allowances to officials who work to recover classified loans and encourage them to intensify recovery efforts.
It will also review and update the existing policy for identifying and providing incentives to good borrowers - those who regularly repay their loans - with the aim of developing a sound credit culture in the country.
Under its long-term strategy ranging four to five years to contain the rising volume of defaulted loans, Bangladesh Bank plans to strengthen the overall credit management framework of banks and ensure greater discipline in loan sanctioning, monitoring, recovery and classification.
The long-term measures focus on addressing the structural weaknesses that contribute to the accumulation of non-performing loans rather than relying only on recovery drives after loans become classified.
