Increase in Large Loan Defaults Raises Pressure on Banking Sector

Feb 18, 2026
Business

Symbolic Image: Bangladesh Bank (Collected)

PNN News Desk, Dhaka

The rate of default on large loans in the country’s banking sector has risen significantly. By the end of June last year, the default rate for loans exceeding 5 billion BDT stood at 48.20%, compared to 17.10% in the same period a year earlier. This information comes from the Banking Update report published by Bangladesh Bank.

According to the report, the proportion of defaults across different loan ranges has been steadily increasing. By the end of June, the default rate for loans up to 10 million BDT was 16%, compared to 7.4% the previous year. For loans ranging from 10.01 million to 100 million BDT, the default rate stood at 26.10%. For loans between 100.01 million and 200 million BDT, the rate rose to 45.70%.

Additionally, the default rate for loans between 200 million and 300 million BDT reached 38%, for 300 million to 400 million BDT it was 42.10%, and for 400 million to 500 million BDT, it was 45.70%. Finally, for loans exceeding 500 million BDT, the default rate was highest at 48.20%.

The central bank stated that the deterioration in loan quality has become clearly visible between the 2023-24 and 2024-25 fiscal years. Particularly, high-value corporate loans show significant risks. This suggests potential weaknesses in the assessment and monitoring of large loans or the influence of sector-specific and macroeconomic pressures on major borrowers.

Sector-wise analysis shows that the highest default rate is in the trade and commerce sector at 44.70%. Industrial loans have a default rate of 35.90%, agriculture, fisheries, and forestry at 31.60%, and construction at 27%. In the transportation sector, the default rate is 22.70%. Consumer loans are comparatively lower at 9.40%, while other institutional loans have a default rate of 12% and miscellaneous sectors 11.30%.

Overall, by the end of June last year, the total default rate in the country stood at 34.60%, which rose to 35.73% in September.

Bankers suggest that the previous tendency to underreport defaulted loans has decreased, revealing a more accurate picture. They anticipate that the default rate may continue to rise in the coming months.

It is noteworthy that when the Awami League-led coalition government took office in January 2009, the amount of defaulted loans in the country was 224.81 billion BDT. Analysts believe the current situation raises fresh concerns about the stability of the banking sector.