Written by The Banking Post
Bangladesh’s state-owned banks are sinking deeper into financial distress as defaulted loans surged 10% in just six months, reaching Tk146,362 crore by June this year. Shockingly, more than 90% of these defaults—worth Tk132,499 crore—have already been written off as bad or loss loans with little chance of recovery.
The four major state lenders—Janata, Sonali, Agrani, and Rupali—are reeling under massive capital shortfalls, inadequate provisioning, and fragile profits. Experts warn the crisis is no longer about profitability but survival, urging swift restructuring or mergers to prevent collapse.
Janata Bank worst performer
Janata Bank stands out as the weakest link, with 76% of its loans in default. Its non-performing loans (NPLs) rose to Tk72,107 crore in June from Tk67,884 crore in December, with 93% already classified as bad or loss. The bank’s capital adequacy is at a dangerous -3.25%, far below the required 12.5%. Losses remain heavy, though narrowed to Tk2,071 crore in the first half of 2025.
Sonali Bank holds ground
Sonali Bank fared comparatively better, with defaults at 20% of its loan book. The bank has managed to stay above regulatory capital requirements, posting a capital adequacy ratio of 10.10%. It also recorded a net profit of Tk591 crore in the first six months of 2025.
Agrani and Rupali struggling
Agrani Bank reported defaults on 40.5% of its loans, amounting to Tk32,257 crore, of which 87% are irrecoverable. Though it returned to profitability with Tk114 crore in the first half of 2025, its capital adequacy ratio stands at only 1.97%.
Rupali Bank is sliding further, with defaults rising to 44% of its loan book, or Tk22,179 crore. Its profit nosedived to just Tk8.34 crore in the same period, while its capital adequacy ratio fell to 2.86%, far below requirements.
“Looting of past 15 years” blamed
Agrani Bank Chairman Syed Abu Naser Bukhtear Ahmed admitted that the real extent of bad loans had been hidden for years. “We need to focus more on recovery rather than just new lending,” he said, adding that decades of mismanagement and irregularities cannot be fixed overnight. He also noted that recovery of dues from government agencies could improve Agrani’s indicators without fresh capital injections.
As the crisis deepens, the government faces a dual challenge—rescuing weak private banks while its own state lenders bleed from within.
