Bangladesh Faces Historic Spike in Non-Performing Loans

Non-performing loans in Bangladesh's banking sector hit Tk 6.44 lakh crore by September, soaring to 35.7% of all banking credit. Increased default loans and a tightened loan classification rule are major contributors. The situation is aggravated by economic issues like high inflation and energy crises.

Bangladesh's banking sector is grappling with a historic rise in non-performing loans, which soared to Tk 6.44 lakh crore by the end of September. This figure represents 35.7% of the nation's total banking credit, according to a statement from the Central Bank released Wednesday.

The surge has been attributed partly to a stricter loan classification rule introduced in March, which marks loans as classified the day after a payment's due date lapses. Previously, accounts were classified after nine months of non-payment.

The situation is compounded by economic challenges, including high inflation—calculated at 8.17% by the Bangladesh Bureau of Statistics—energy crises, and decreasing purchasing power, making investment growth a challenge, as reported by The Business Standard and Prothom Alo.

(With inputs from agencies.)