The total classified loans in Bangladesh have surged to a staggering Tk 2.85 trillion, representing nearly 17% of the total disbursed loans, according to an updated report released by the Bangladesh Bank on Sunday.

The financial sector’s persistent vulnerabilities are largely attributed to the soaring volume of non-performing loans (NPLs).

Over the years, the upward trajectory of these loans has continued unabated, putting additional strain on the banking system.

Record-High Figures

As of the end of September this year, classified loans amounted to Tk 2,84,977 crore, which is 16.93% of the total loans disbursed.

This marks the highest ratio of classified loans to disbursed loans in 16 years.

In contrast, the total classified loans stood at Tk 2,11,391 crore as of June, which indicates a sharp increase of Tk 73,586 crore within just three months, signalling a worrying trend for the nation’s financial stability.

Breakdown

The burden of classified loans is not evenly distributed across the banking sector.

State-owned banks continue to bear the brunt, with Tk 1,26,111 crore in NPLs, amounting to a staggering 40.35% of their total disbursed loans.

Private banks, while comparatively better positioned, are not immune to the crisis. Their classified loans stand at Tk 1,49,806 crore, accounting for 11.88% of their total disbursed loans.

Foreign banks, on the other hand, report classified loans of Tk 3,245 crore, representing 4.99% of their disbursed loans.

Specialised banks also face challenges, with Tk 5,813 crore in NPLs.

A Worsening Crisis

The ever-increasing figures highlight the need for urgent reforms in the banking sector.

The unchecked rise in classified loans not only reflects governance issues but also undermines investor confidence in the financial system.

Experts argue that without stringent oversight and stricter loan recovery mechanisms, the situation will continue to deteriorate, further exposing the economy to systemic risks.

This alarming state of affairs calls for swift and decisive action from regulators and policymakers to address the root causes and safeguard the financial sector from long-term damage.