The banking sector faces a surge in non-performing loans (NPLs), reaching a staggering Tk 1.31 trillion.
This increase of Tk 109.64 billion in the first quarter of the year indicates a worrisome lack of governance, according to a report from Bangladesh Bank released on Sunday.
This marks a steady rise from the 8.16 percent seen in December and 8.53 percent in March of the previous year.
Anis A Khan, former chairman of the Association of Bankers, Bangladesh (ABB), called the control of bad loans a joint venture effort.
Khan urged the central bank to enforce regulations more strictly and proposed a fast-track tribunal to clear backlog cases. He also recommended the establishment of an asset reconstruction company to hold defaulters accountable.
Echoing these sentiments, Shah Md Ahsan Habib, director of the Bangladesh Institute of Bank Management (BIBM), said lack of good governance prevented bankers from holding willful defaulters accountable.
"Any bad loan is a red flag for the economy, necessitating immediate action to restore stability," Dr. Ahsan told the Daily Sun.