Written by The Banking Post
Bangladesh’s banking sector faces significant risk from concentrated exposure to six major business groups, according to an internal central bank report that highlights mounting concerns over asset quality and risk management.
The confidential document identifies large volumes of non-performing loans linked to six conglomerates — Saifuzzaman Chowdhury, S Alam, Beximco, Sikdar, Nassa and Orion — with multiple banks heavily exposed across these portfolios.
The analysis shows Islami Bank Bangladesh PLC appearing in five of the six exposure categories, underscoring its deep involvement in high-risk loans. Newly consolidated Sammilito Islami Bank PLC is listed across all six groups, reflecting substantial inherited stressed assets from previously merged weak banks.
Several other banks also feature prominently, including First Security Islami Bank, Social Islami Bank, Union Bank, Janata Bank, Rupali Bank, IFIC Bank, United Commercial Bank, AB Bank and Al-Arafah Islami Bank.
State-owned lenders such as Sonali Bank and Agrani Bank are also shown to have notable exposure to defaulted loans linked to these groups.
The findings point to systemic vulnerabilities within the sector, with risks spread across both private and state-owned institutions.
In response, Bangladesh Bank has initiated a coordinated recovery strategy by designating selected institutions as “lead banks” to oversee loan recovery efforts for each group, in collaboration with international firms.
The selection criteria prioritise banks with experience in handling complex negotiations and international non-disclosure agreements, enabling them to manage recovery processes more effectively.
Under the plan, United Commercial Bank will lead recovery efforts for the Saifuzzaman Chowdhury and Orion groups, while Islami Bank will head the process for the S Alam group. National Bank has been assigned to the Beximco and Nassa groups, and IFIC Bank will lead efforts for the Sikdar group.
Banks undergoing or scheduled for mergers will not be eligible to act as lead institutions, reflecting ongoing restructuring efforts in the sector.
Officials said the initiative marks a shift towards a more structured and collaborative approach to resolving long-standing default loan issues, with the aim of stabilising the financial system and improving recovery outcomes.
