BB lifts lending caps on Sonali Bank branches

The Bangladesh Bank (BB) has lifted long-standing lending limits on five key branches of state-owned Sonali Bank, allowing the country’s largest state-owned commercial bank to approve loans without branch-specific ceilings. 
The move removes fixed caps on the amount these branches can lend, enabling the bank to finance eligible borrowers based on their requirements.
The central bank took the decision following a request from Sonali Bank, which argued that lending restrictions at its major branches were limiting financing for large clients and constraining private-sector credit, potentially affecting overall economic activity.
Under the decision, lending caps have been withdrawn from Sonali Bank’s Local Office Branch, Foreign Exchange Corporate Branch, Shilpa Bhaban Corporate Branch, Shaheed Abrar Fahad Avenue Corporate Branch and Laldighi Corporate Branch in Chattogram. 
Previously, these branches could approve loans ranging from Tk5 crore to Tk20 crore, depending on the branch.
BB first imposed lending limits on Sonali Bank in 2007 under the World Bank-funded state-owned bank reform programme. 
Oversight of the bank was further tightened after the Hall-Mark loan scam in 2012.
In its recent request, Sonali Bank said most large clients preferred to conduct business through these branches because of faster and easier access to banking services. 
However, the lending ceilings prevented the bank from meeting their financing needs. It also argued that removing the caps would help expand private-sector credit and support economic growth. 
The central bank formally informed the bank of its decision at the end of last month.
Despite lifting the lending caps, the central bank instructed Sonali Bank to exercise caution in approving new loans. 
It asked the bank to strengthen due diligence and avoid financing borrowers with controversial or questionable lending records.
“Our five branches were operating under lending limits. Most of our good clients are attached to these branches, but we could not finance them despite their demand,” Sonali Bank Managing Director Shawkat Ali Khan said.
“We therefore requested Bangladesh Bank to withdraw the restrictions. The central bank responded positively, and we can now provide financing to our good clients,” he added.
Major corporate customers generally prefer the principal branches of state-owned banks, where, in many cases, 30% to 40% of a bank’s total loan portfolio is concentrated. 
At Sonali Bank, nearly 27% of its outstanding loans are concentrated at the Local Office Branch. 
BB had previously capped working capital loans at Tk5 crore at the Local Office Branch and Tk20 crore at the other four branches.
On 4 June, the central bank raised the Local Office Branch’s lending limit from Tk5 crore to Tk20 crore but restricted such lending to existing borrowers and priority sectors, including cottage, micro, small and medium enterprises (CMSMEs), export-oriented industries, agro-processing, import-substitution industries, pharmaceuticals, renewable energy, and production- and employment-generating sectors.
While the lending caps were still in force, Sonali Bank’s board approved a Tk40 crore loan for Arham Multi Trading and a Tk50 crore loan for Munnu Fabrics, a concern of the Munnu Group, in May. 
The bank subsequently sought BB’s approval to disburse the loans and requested the withdrawal of the lending caps. 
With the restrictions now removed, the loans will no longer require separate clearance from the central bank.
Khan said the Munnu Group loan had been approved earlier but could not be disbursed because of the prevailing situation at the time.
“With the lending restrictions removed, both institutions will now receive the loans in accordance with banking rules,” he said.
Sonali Bank remains the strongest-performing state-owned commercial bank. Its net profit rose from Tk988 crore in 2024 to Tk1,313 crore in 2025, making it the country’s third most profitable commercial bank among both public and private lenders.
According to the bank’s financial statements, a significant share of its earnings came from investments in government treasury bills and bonds. 
The bank currently has no capital shortfall or provisioning deficit and has outperformed other state-owned banks in managing non-performing loans.
Sonali Bank’s total deposits increased to Tk1.80 lakh crore in 2025, while its outstanding loan portfolio reached Tk1.05 lakh crore. 
Although the banking sector’s overall non-performing loan ratio has exceeded 35%, Sonali Bank’s NPL ratio stands at 18%. 
However, large defaulting groups, including Hall-Mark, Beximco, Thermex and Orion, continue to hinder a significant reduction in the bank’s classified loans. The bank’s loan-to-deposit ratio (LDR) remains below 58%.