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The International Chamber of Commerce-Bangladesh has raised alarm over persistently high non-performing loans, calling them one of the most serious structural weaknesses in the country’s financial sector.

In its October–December 2025 quarterly bulletin, the chamber said defaulted loans have climbed beyond Tk 6.44 trillion, accounting for about 35.7 per cent of total outstanding credit. Such levels, it warned, pose a direct threat to banks, depositors and overall macroeconomic stability.

While acknowledging that banks remain central to mobilising savings, financing trade and supporting investment and employment, the chamber cautioned that the sustainability of Bangladesh’s growth—especially as it aspires to upper-middle-income status—will increasingly depend on the strength, credibility and resilience of the banking system, as well as the effectiveness of the central bank.

Describing the scale of bad loans as alarming by international standards, the bulletin noted that excessive NPLs weaken balance sheets, create capital shortfalls, constrain lending, raise borrowing costs and deter fresh investment. Over time, these pressures can erode depositor confidence and undermine financial stability.

The ICCB welcomed recent regulatory steps that have forced banks to more accurately recognise and report defaulted loans, saying they have exposed long-standing weaknesses. However, it stressed that disclosure alone is not enough, underscoring the need for stronger financial discipline, sound risk management and better governance to restore long-term health.

The chamber also emphasised the importance of distinguishing wilful defaulters from businesses facing genuine distress, arguing that viable firms should receive structured support while deliberate misconduct must be dealt with firmly and transparently.

Drawing on global experience, the bulletin highlighted the critical role of an independent and professional central bank in safeguarding financial stability. Beyond monetary policy, the central bank’s responsibilities include prudential regulation, crisis management, oversight of payment systems and maintaining confidence in the financial system.

Reviewing actions taken over the past two years, the ICCB noted that extraordinary measures—such as liquidity support, guarantees and refinancing facilities—helped stabilise the system during periods of stress and protect depositors. Still, it cautioned that emergency interventions cannot replace prudent lending, strong supervision and effective governance.

The bulletin pointed to the Bank Resolution Ordinance 2025 as a major recent development, introducing a structured framework to deal with distressed institutions. Under this framework, five Shariah-based banks were consolidated into a single state-owned entity to protect depositors and contain systemic risk—the largest intervention of its kind in the country.

At the same time, it noted concerns that mergers involving publicly listed companies require shareholder approval under existing company laws. While consolidation can reduce contagion risk, the chamber said long-term success will depend on accountability, improved governance, modern risk-management practices and robust regulatory oversight.

The ICCB concluded that Bangladesh is at a critical juncture. Supporting export diversification, CMSME growth, innovation, climate-resilient investment and infrastructure development will require a strong and autonomous central bank, strict action against wilful defaulters, improved transparency, globally aligned risk standards and continuous regulatory capacity-building.

“The objective is not merely to avoid a crisis, but to build a financial system that commands trust at home and abroad and supports sustainable economic transformation,” the bulletin said.

The chamber reaffirmed its commitment to working with regulators, policymakers, banks and the business community to ensure the country’s financial system remains stable, credible and globally respected.