Awami League’s ‘liability’ falls on BNP’s shoulders

• Bangladesh tops world in default loan rate, IMF data shows
• 33 percent of disbursed loans in Bangladesh are classified as defaulted, according to the IMF’s Financial Soundness Indicators Database

The rule of the fascist Awami League was a period of anarchy in the banking sector. During its 15 years and eight months in power, licences were issued to numerous banks and insurance companies. Not only bankers, economists and corporate businessmen, but even timber traders, transport businessmen and potato and vegetable traders received bank licences based on political qualifications. Taking advantage of the opportunity to establish banks, leaders, businessmen, bureaucrats and industrialists of the fascist Awami League hollowed out the banking sector by taking loans. Alongside looting through projects and mega-projects, they borrowed huge sums of money from the banking sector based on their political identities. As loans taken from banks were not repaid, the volume of defaulted loans continued to rise. As a result, Bangladesh has now emerged as the country with the highest rate of defaulted loans in the world. The information has been presented in the Financial Soundness Indicators Database of the International Monetary Fund (IMF). As a result, the burden of defaulted loans incurred during the Awami League rule by taking bank loans and failing to repay them has fallen on the shoulders of the BNP government, which came to power through an election.

Six months have passed since the elected BNP government took charge. During this period, lending has been almost negligible. Yet defaulted loans exceeding Tk 600,000 crore have become a thorn in the government’s side. Nearly Tk 33 out of every Tk 100 disbursed as bank loans are now classified as defaulted, equivalent to 32.78 percent. Through this, Bangladesh ranks first in the world in terms of the rate of defaulted loans. Chad, Equatorial Guinea, Algeria, Ghana and even war-torn Ukraine are in a better position than Bangladesh. The country is sinking under hundreds of thousands of crores of taka in fake and anonymous loans disbursed during the fascist government’s tenure.

It is learnt that when fugitive Sheikh Hasina came to power in 2009, the amount of defaulted loans was only Tk 22,481 crore. By June 2024, just before she was ousted from power, it had risen to Tk 211,391 crore. At the end of March 2026, the amount of defaulted loans stood at Tk 588,704 crore. In the following three months alone, it increased by Tk 17,851 crore to Tk 606,555 crore. Earlier, in September 2025, defaulted loans had reached a record Tk 644,515 crore.

People familiar with the sector said that following the political changeover in August 2024, the actual picture of long-standing irregularities, fraud and anonymous loans in the banking sector is now emerging. As a result, the amount of defaulted loans has reached an alarming level. During the fascist regime, many troubled loans had long been shown as regular through repeated rescheduling, special concessions and accounting adjustments.

Dr. Fahmida Khatun, distinguished fellow of the private research organisation Centre for Policy Dialogue (CPD), said defaulted loans did not emerge suddenly. The actual weaknesses of the banking sector are now coming to light as part of the ongoing asset-quality review. Previously, many troubled loans remained hidden through rescheduling, special concessions and accounting adjustments.

Following the political change, asset-quality reviews of banks and audits by domestic and foreign institutions have revealed the actual picture of irregularities, fraud and anonymous loans. As a result, a huge volume of loans that had previously remained hidden has now turned into defaulted loans.

Regarding the rise in defaulted loans, Bangladesh Bank spokesperson Mr. Arif Hossain Khan said the amount of defaulted loans has increased mainly because interest continues to accrue on defaulted loans at regular rates and many old unpaid loans have been brought into the accounts. However, a policy opportunity for loan rescheduling has already been provided to reduce defaulted loans. As a result, the default rate may decline somewhat in the future.

Last April, Finance Minister Mr. Amir Khasru Mahmud Chowdhury disclosed the names of the top 20 loan-defaulting organisations in Parliament. Of them, 11 were under the control of Chattogram-based S Alam Group. The remaining organisations were also close to the Awami League government.

Among the banks, the situation is worst for the five merged banks. Facing severe liquidity and loan crises, these banks are currently operating as Sammilito Islami Bank. According to central bank data, more than 80 percent of the loans disbursed by these five banks are now classified as defaulted. The banks are EXIM Bank, Social Islami Bank, First Security Islami Bank, Global Islami Bank and Union Bank. Four of them were owned by S Alam Group. EXIM Bank was owned by Mr. Nazrul Islam Mazumder, chairman of Nassa Group. Apart from these, defaulted loans at state-owned BASIC Bank and Janata Bank, and private-sector AB Bank, Bangladesh Commerce Bank, ICB Islamic Bank, Padma Bank, Islami Bank and IFIC Bank account for more than 50 percent of their respective loan portfolios.

People concerned with the sector said the banks have reached such a situation because huge sums of money were siphoned out in the past through irregularities, fraud, opening fake letters of credit (LCs) and using anonymous entrepreneurs under political influence.

To overcome the deadlock in the banking sector, the interim government had allowed loan rescheduling with special concessions and one-time repayment of loans through interest waivers. The BNP government has also provided this facility for loan recovery. However, sector insiders said that although repeated rescheduling may temporarily reduce the amount of defaulted loans on paper, it will not bring fundamental changes to the banking sector.

Mr. Mashrur Arefin, chairman of the Association of Bankers, Bangladesh (ABB), said many entrepreneurs have come under pressure due to the energy crisis. New loan disbursement has declined significantly. Credit growth in the private sector has fallen to its lowest level. As a result, defaulted loans have increased. The amount of defaulted loans may come down in the future, he added.

Ukraine had remained at the top of the list of countries with the highest defaulted loan rates for a long time. The country’s defaulted loan rate was 37.4 percent in 2023. Following Russia’s invasion, it rose to nearly 39 percent amid the economic shock. However, the country’s loan situation began to improve from 2024. The ratio of defaulted loans to total loans declined as loan recovery, restructuring and the disbursement of relatively better-quality new loans increased.

Defaulted loans in Bangladesh were not created anew. Rather, a huge volume of troubled loans that had been concealed for a long time through rescheduling, special concessions and accounting tactics are now being recognised as defaulted loans. To reduce defaulted loans, Bangladesh Bank has aligned its loan-classification and provisioning rules with international standards. Asset-quality reviews are being conducted on weak banks. The boards of directors of several banks have been restructured. Risk-based supervision has also been introduced. As a result of these measures, many troubled loans that were previously shown as regular are now being identified as defaulted, increasing the volume of defaulted loans.

Professor Dr. Rashed Al Mahmud Titumir, the Prime Minister’s adviser on finance and planning, said defaulted loans stood at 11 percent in 2024. A forensic audit in June 2025 found that the ratio of defaulted loans was 35.5 percent. This means that those who were in various positions had helped conceal the defaulters. It is also uncertain whether this calculation is accurate. The amount of defaulted loans could rise further. In March this year, the ratio of defaulted loans fell to 32.6 percent. We are seeing a ray of hope. The ratio of defaulted loans is declining.