The issue of non-performing or defaulted loans has long been a major challenge in Bangladesh’s banking sector. While this problem was initially limited to state-owned banks, over time it spread to large private banks as well. The culture of loan default has gradually taken root and grown into a massive, entrenched problem.

Following the fall of the Awami League government in August last year, previously concealed defaulted loans in the banking sector began to surface. Additionally, loans taken by several Awami League leaders and their close business associates have also turned non-performing. As a result, within the span of a year, the share of defaulted loans in the banking sector has jumped from 12 per cent to over 28 per cent of total disbursed loans. In other words, more than a quarter of all loans issued by banks are now in default.

A recently published report by the Asian Development Bank (ADB) highlighted that Bangladesh now ranks highest in Asia in terms of non-performing loans. The report, which assessed various financial indicators across countries in the Asia-Pacific region, was based on data from 2023 — a year when Bangladesh had already topped the list. However, it is known that the situation has worsened significantly in 2025.