---

Bangladesh Bank has called on commercial banks to intensify recovery efforts through loan restructuring and partial write-offs, as the true scale of the country’s non-performing loans becomes visible after the recent change in government.

At a meeting with managing directors on Thursday, Governor Ahsan H Mansur underscored the urgency of confronting the NPL crisis, which has surged to an unprecedented Tk 6.44 lakh crore—35.73% of all loans—as of September. The figure stood at Tk 2.11 lakh crore in June, before the transition of power, and Tk 3.45 lakh crore last December.

Push for partial write-offs

Earlier this month, the central bank allowed banks to partially write off bad and loss-category loans that show little chance of recovery. The move is intended to clean up balance sheets and create space for more accurate reporting of impaired assets.

Sirajul Islam, executive director of Bangladesh Bank, said MDs were instructed to strictly follow policy circulars designed to help rehabilitate distressed borrowers and stabilise the financial system. He said the governor urged banks to use the partial write-off mechanism to deal with deeply impaired loans.

One private bank MD who attended the meeting said the central bank chief also encouraged banks to provide rescheduling facilities to borrowers willing to regularise their debts, following policy guidelines already in place.

Sectoral imbalance and lending priorities

The governor pointed to longstanding distortions in loan distribution, noting that agriculture—which contributes 14–15% to GDP—receives only about 2% of total loans. He urged banks to raise agricultural lending to above 10%.

He also called for greater support to small and medium enterprises, recommending a 20% growth target for CMSME portfolios. To aid this, he assured banks that provisioning requirements for CMSME loans would be reduced to 0.5% from the existing 1%.

During the meeting, a bank chief brought up earlier proposals to raise personal loan limits from Tk 20 lakh to Tk 4 crore and credit card limits from Tk 20 lakh to Tk 40 lakh. The governor questioned why the proposals had stalled and asked deputy governors for clarification.

Restructuring scheme falters

Despite the introduction of a special long-term restructuring programme for businesses, NPLs have continued to rise. Bankers blame poor implementation and argue that the scheme itself is flawed.

They say the current plan—which offers a two-year grace period and requires only 1–2% down payment—poses risks to depositors and discourages genuine recovery. Several bankers noted that influential borrowers often secure approval but then avoid engaging with banks to finalise restructuring terms.

Businesses, on the other hand, accuse banks of delaying implementation even after approvals, which they say increases defaults and penalises previous reschedulers.

According to industry insiders, Bangladesh Bank wants banks to fully comply with restructuring policies, but they warn that unless the flaws are corrected, long-term rescheduling will not reduce default risk—and may worsen it.