NPLs cross Tk6 lakh crore in June

Infograph: TBS

Non-performing loans (NPLs) in the country's banking sector rose by nearly Tk18,000 crore in the three months to June, crossing Tk6 lakh crore despite Bangladesh Bank's continued efforts to contain toxic loans through relaxed rescheduling facilities and lower down-payment requirements.

The total default loan ratio in the banking sector rose to 32.79% in June from 32.26% in March, according to a Bangladesh Bank statement. The total amount of default loans stood at Tk5.8 lakh crore in March.

The rise in default loans came as private-sector credit growth fell to a historic low of 4.47% in June, indicating that existing loans continued to turn sour as business activity remained sluggish amid the ongoing energy crisis.

Bangladesh Bank's special loan rescheduling package, introduced a year ago, has also failed to resolve the default loan problem.

Against this backdrop, the central bank recently extended the special rescheduling facility for a second time, offering more generous terms as many borrowers who had previously availed themselves of the facility subsequently fell into default again.

Around 300 borrowers rescheduled or restructured loans worth nearly Tk1 lakh crore under the special facility announced in September last year. The package allowed repayment over 10 years, including a two-year grace period.

Although many of those borrowers remain within the grace period, the Bangladesh Bank has now allowed them to make fresh applications under the latest package.

Announced on 31 August, the latest package offers more relaxed terms. Defaulters with loans exceeding Tk1,000 crore can now reschedule their loans for up to 15 years, including a two-year grace period, while the restructuring period has been extended to four years from two.

Explaining the need to extend the facility, Shahriar Siddiqui, director and assistant spokesperson of Bangladesh Bank, said industries had come under repeated pressure since the previous support was introduced.

"After the previous support was provided, we faced a gas crisis. The Iran war also affected oil prices. The economy has come under stress several times. This has had an impact on industries," he said.

Shahriar continued, "Because industries have come under stress, their normal cash flows have been disrupted. The situation was reviewed, and it was decided that the repayment arrangements should be made somewhat more relaxed."

The Bangladesh Bank assistant spokesperson said most defaulters who had previously availed themselves of the facility were still within the grace period.

"So the point is that they may come under stress in the future, and this new arrangement has been introduced to make things smoother in anticipation of that."

He said the business community had also requested Bangladesh Bank to extend the facility, citing the ongoing energy crisis.

The central bank had managed to temporarily bring down the default loan ratio to 30.60% in December 2025 through rescheduling. However, the ratio rose again to 32.26% in March after borrowers who had availed themselves of the facility failed to repay their loans.

The Bangladesh Bank has also introduced a Tk60,000 crore stimulus package at subsidised interest rates to support ailing industries, hoping that improved business activity will help borrowers repay their loans and eventually reduce default loans.

All commercial banks are eligible to participate in the stimulus programme, and the Bangladesh Bank has started signing agreements with banks for disbursement under the refinancing scheme.

Under the package, borrowers will receive loans at 7% interest, while the average market lending rate remains above 10%.