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Defaulted loans at Bangladesh’s nine state-owned banks have climbed to nearly Tk 1.89 trillion, prompting the government to accelerate reforms aimed at restoring discipline in the banking sector, Finance Minister Amir Khasru Mahmud Chowdhury told Parliament on Sunday.

Replying to a supplementary question from reserved-seat MP Sabikunnahar during the 23rd sitting of the second session of the 13th Jatiya Sangsad, the minister said defaulted loans at the state-owned banks stood at Tk 1,88,701.75 crore as of May 31.

The figures are based on data submitted by the nine state-owned banks to the Bangladesh Bank’s Credit Information Bureau (CIB). The banks are Agrani Bank, Janata Bank, Rupali Bank, Sonali Bank, BASIC Bank, Bangladesh Development Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and Probashi Kalyan Bank.

The finance minister said reducing non-performing loans is a key priority of the government and an important commitment in its election manifesto.

He said Bangladesh Bank has adopted a comprehensive reform strategy involving short-, medium- and long-term measures.

In the short term, the central bank is preparing guidelines for resolving classified loans and updating its credit risk management framework in line with international standards.

Medium-term measures include implementing the International Financial Reporting Standard (IFRS-9), introducing accredited collateral valuation institutions, revising agricultural loan rescheduling policies, providing incentives to bank officials for recovering defaulted loans and rewarding regular borrowers.

The long-term reform agenda includes capping the total amount a single borrower can obtain from the banking system, taking tougher action against wilful defaulters, appointing experienced bankers to Money Loan Courts, preventing delays in loan recovery caused by writ petitions and enacting legislation to establish private-sector asset management companies.

The minister said the government has already enacted the Bank Resolution Act 2026 to improve the management of troubled banks and is preparing the Deposit Protection Act 2026 to strengthen protection for depositors.

He added that amendments to the laws governing Bangladesh Bank, the Insurance Development and Regulatory Authority (IDRA), the Bangladesh Securities and Exchange Commission (BSEC), along with revisions to the Negotiable Instruments Act, have strengthened the legal framework for tackling cheque fraud and improving the disposal of cheque dishonour cases.

“The government is working to restore discipline in the financial sector through a stronger legal framework, a transparent bank-resolution process and enhanced protection for depositors.”

Responding to another supplementary question from Gazipur-4 MP Salauddin, the finance minister said investigations are underway into alleged irregularities, corruption and large-scale financial misappropriation at several banks, including Probashi Kalyan Bank.

He said the investigation is not confined to a single institution and that action has already been taken against several individuals.

“Restoring order in the financial sector remains one of the government’s highest priorities.”

The minister acknowledged that longstanding irregularities in the banking sector cannot be eliminated overnight but said the government’s reform and enforcement efforts would continue.