Distress assets in Bangladesh’s banking sector surged to more than Tk 11 lakh crore by the end of December 2025, exposing the fragile health of the country’s financial system amid a historic surge in non-performing loans (NPLs).
According to the Financial Stability Report 2025, published by Bangladesh Bank on Tuesday, total distress assets—a combination of gross NPLs, rescheduled loans, written-off loans, and loans stuck in court—reached alarming levels.
Gross NPLs alone stood at Tk 5,57,217 crore, accounting for 30.60 per cent of total outstanding loans.
Outstanding rescheduled loans amounted to Tk 4,46,890 crore in 2025, representing a rise of Tk 1,70,503 crore over the year.
Written-off outstanding loans reached Tk 83,479 crore, while loans under stay orders hit a record Tk 1,82,419 crore.
The cumulative distress assets exceed Tk 11 lakh crore, indicating severe stress across the banking landscape.
Total outstanding loans and advances reached Tk 20 lakh crore in 2025.
The banking sector’s Capital to Risk-weighted Assets Ratio (CRAR) deteriorated sharply from 3.08 per cent in 2024 to negative 2.64 per cent in 2025, signalling severe capital adequacy weaknesses.
The Tier-1 capital ratio also fell to negative 5.21 per cent, well below the regulatory minimum of 6 per cent. Only 42 out of 61 banks remained compliant with the minimum CRAR requirement of 10 per cent, though these banks held 60.51 per cent of total sector assets.
The Islamic banking segment experienced even more acute stress, with its CRAR plunging to negative 43.18 per cent and NPLs surging by 56.15 per cent. Five Islamic banks were placed under resolution and merged into Sammilito Islami Bank under the Bank Resolution Act 2026, with Tk 12,000 crore transferred from the Deposit Protection Fund as financial assistance.
Profitability indicators also deteriorated significantly. Return on Assets (ROA) fell to negative 4.81 per cent, while Return on Equity (ROE) plummeted to negative 243.90 per cent.
The Net Interest Margin turned negative at -0.49 per cent, reflecting rising funding costs and weak asset returns. Total loan loss provisions surged by Tk 1,30,741 crore in 2025, contributing to the sector’s massive net loss.
Despite these challenges, the banking sector’s overall liquidity remained broadly stable, with the Advance-Deposit Ratio declining to 77.72 per cent and the Liquidity Coverage Ratio improving to 186.12 per cent. However, 18 scheduled banks failed to withstand prescribed liquidity stress tests.
The government’s treasury bond issuance rose by 35.57 per cent to Tk 1.62 lakh crore, while Bangladesh Bank provided Tk 21.68 lakh crore in liquidity support to the financial system.
The finance company sector also saw asset quality deterioration, with its NPL ratio rising to 33.32 per cent and its capital adequacy ratio falling to negative 23.19 per cent. Conversely, the microfinance sector remained comparatively stable, maintaining an NPL ratio of 8.52 per cent.
Bangladesh Bank introduced several policy initiatives in 2025, including the Bank Resolution Ordinance (later enacted as the Bank Resolution Act 2026), a Prompt Corrective Action framework, and risk-based supervision to strengthen oversight and crisis management.
