Bangladesh NPLs Cross Tk 6 Lakh Crore in June Despite Rescheduling Efforts

TBS Report, Dhaka — Non-performing loans (NPLs) in Bangladesh's banking sector rose by nearly Tk 18,000 crore in the three months to June 2026, crossing Tk 6 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 percent in June from 32.26 percent in March, according to a Bangladesh Bank statement. The total amount of default loans stood at Tk 5.8 lakh crore in March — meaning approximately Tk 18,000-20,000 crore in additional loans turned sour in just three months.

📊 NPL Trajectory

• 💰 December 2025: NPL ratio temporarily brought down to 30.60% through rescheduling
• 💰 March 2026: ratio rose to 32.26% as rescheduled borrowers failed to repay
• 💰 June 2026: ratio further rose to 32.79% with Tk 6+ lakh crore total NPL
• 📊 3-month increase: ~Tk 18,000 crore (March to June 2026)
• 📊 Private sector credit growth: 4.47% (historic low, June 2026)

⚠️ Why NPLs Keep Rising

The rise in default loans came as private-sector credit growth fell to a historic low of 4.47 percent 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.

💰 Special Rescheduling Package Performance

Around 300 borrowers rescheduled or restructured loans worth nearly Tk 1 lakh crore under the special facility announced in September 2025. The package allowed repayment over 10 years, including a two-year grace period. Although many of those borrowers remain within the grace period, Bangladesh Bank has now allowed them to make fresh applications under the latest package.

Announced on 31 August 2026, the latest package offers more relaxed terms:

• 💰 Tk 1,000 crore+ loans: rescheduling up to 15 years (including 2-year grace)
• 💰 Restructuring period: extended to 4 years from 2 years
• 💰 Previous beneficiaries: can apply again for fresh facilities

🏛 Bangladesh Bank Explanation

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.

"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," Shahriar continued.

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."

💰 Tk 60,000 Crore Stimulus Package

The Bangladesh Bank has also introduced a Tk 60,000 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 Bangladesh Bank has started signing agreements with banks for disbursement under the refinancing scheme.

• 💰 Stimulus package size: Tk 60,000 crore
• 💰 Borrower interest rate: 7%
• 💰 Market lending rate: above 10%
• 💰 Banks signed: 17 banks for Tk 41,000 crore disbursement

🌏 Bangladesh Has Highest NPL Rate in World

According to Prothom Alo's separate analysis, Bangladesh has the highest non-performing loan rate in the world — a distinction that underscores the severity of the banking sector's structural challenges. The 32.79 percent NPL ratio compares unfavourably with:

• 📊 India: ~3-4% NPL ratio
• 📊 Vietnam: ~2-3% NPL ratio
• 📊 Pakistan: ~8-9% NPL ratio
• 📊 Bangladesh: 32.79% NPL ratio (highest globally)

📊 Strategic Context: Banking Sector Stress

The Tk 6 lakh crore NPL figure comes amid broader banking sector stress:

• 📊 Sammilito Islami Bank: 86% NPL ratio on Tk 1,92,000 crore loans
• 📊 15-year rescheduling for Tk 1,000 crore+ defaulters (31 August)
• 📊 Government bank borrowing: Tk 165,538 crore in FY26
• 📊 BB net profit: Tk 25,977 crore (paradoxically high from liquidity support)
• 📊 Mattress money: Tk 3.36 trillion outside banking system
• 📊 Bank Resolution Act amendment: blocking former owners from returning
• 📊 18-month NPL reduction roadmap: ongoing but challenged by repeated shocks

🌏 Strategic Implications

The Tk 6 lakh crore NPL milestone carries several strategic implications:

• ⚠️ Highest global NPL rate: 32.79% is extraordinary by international standards
• ⚠️ Rescheduling failure pattern: temporary dip (30.60%) followed by rebound
• ⚠️ Structural problem: not just cyclical — deep-seated governance and risk management failures
• ⚠️ Gas crisis compounding: industrial stress feeding into new NPLs
• ⚠️ Private credit growth collapse: 4.47% means few new loans being extended
• ✅ Extended rescheduling: 15-year facility provides breathing room
• ✅ Tk 60,000 crore stimulus: subsidised lending to support recovery
• ✅ Bank Resolution Act: legislative framework for distressed bank resolution
• ⚠️ Moral hazard: repeated rescheduling may encourage further default

The Tk 6 lakh crore NPL milestone represents a critical juncture for Bangladesh's banking sector — with the 32.79 percent default ratio marking the country as having the highest NPL rate globally. The repeated pattern of rescheduling bringing temporary relief followed by renewed default growth suggests that the structural causes of NPL accumulation — weak corporate governance, political lending, inadequate risk assessment, and industrial stress from energy shortages — have not been addressed at their root. The 18-month NPL reduction roadmap, Tk 60,000 crore stimulus, extended 15-year rescheduling, and Bank Resolution Act amendment together represent the government's comprehensive response — but the ultimate test will be whether these measures can break the cycle of temporary improvement followed by renewed deterioration through the LDC graduation transition period.