Non-performing loans (NPLs) in the country’s banking sector hit an all-time high of Tk1,82,295 crore in the first quarter of the year, accounting for 11% of the total loans disbursed till 31 March, according to the latest data from the Bangladesh Bank (BB).

In the three months through March, bad loans rose by Tk36,367 crore, up 25% from the previous three months, BB data showed. The banking sector had Tk1,45,633 crore of default loans at the end of December last year.

As of March-end, total disbursed loans stood at Tk16,40,855 crore, of which Tk1,82,295 crore soured, the highest in the history of Bangladesh.

State owned commercial banks’ defaulted loan stood at 27% of their total loan. Besides, private commercial banks had 7.28% classified loans, foreign banks had 5.20% bad loans and specialised banks had 13.88% sour loans.

‘Painful restructuring needed’

Finance Minister Abul Hassan Mahmood Ali in his proposed budget for FY25 raised concerns about non-performing loans and a lack of financial discipline in the banking sector.

According to the Medium-Term Macroeconomic Policy Statement placed with the budget documents," To restore discipline in the banking sector, painful restructuring, such as mergers, may need to be completed for some banks. However, the process may be lengthy as well as difficult."