The newly elected government has assumed responsibility for an economy already under significant strain. However, the banking sector — widely regarded as the lifeblood of the economy — is now confronting three major challenges: a mountain of defaulted loans, large-scale money laundering, and persistent governance deficiencies. Analysts warn that without resolving these crises, restoring overall economic stability will be difficult.
The volume of non-performing loans (NPLs) in Bangladesh’s banking sector has climbed to nearly Tk 6.5 lakh crore. According to Bangladesh Bank data as of September 2025, more than one-third of total disbursed loans are now classified as defaulted. Of the Tk 18,03,840 crore in outstanding loans, approximately 35.73 percent are at risk of non-recovery.
Experts attribute the crisis to years of irregularities, weak supervision, and unplanned loan disbursement practices.
Former bankers argue that forming a dedicated task force is essential to determine the true extent of defaulted loans and accelerate recovery efforts. They also stress that unless the culture of name-only and inadequately scrutinized loan approvals is halted, the banking sector will face deeper vulnerabilities.
Meanwhile, allegations have surfaced that nearly USD 234 billion was laundered abroad over the past one and a half decades through various irregularities and corrupt practices. Preventing money laundering and bringing informal hundi transactions under control remain major challenges for the new government. Although recent months have seen some improvement in stabilizing the foreign exchange market and an increase in remittance inflows, concerns persist.
According to Bangladesh Bank, several corrective measures were taken during the interim government’s tenure, including dissolving the boards of multiple banks, merging several institutions, and providing substantial liquidity support. The policy interest rate was also raised to 10 percent. Despite these initiatives, the sector has yet to achieve the desired level of stability.
Former Bangladesh Bank Governor Dr. Farashuddin Ahmed has emphasized that restoring discipline in the banking sector should be the top priority. He noted that improved discipline would help prevent fraudulent loan disbursements, curb hundi transactions, and boost remittance inflows and foreign exchange reserves.
Describing defaulted loans as “a cancer” within the banking system, he stressed that resolving the issue is imperative. He also underscored the need to control inflation and increase revenue collection.
Economists believe that establishing sound governance in the banking sector, recovering defaulted loans, and halting money laundering must be at the forefront of the new government’s agenda. Successfully addressing these three challenges, they argue, would help restore confidence and discipline in the broader economy.
