New Record in Default Loans, Central Bank Under Scrutiny.

The volume of non-performing loans (NPLs) in Bangladesh's non-bank financial institutions (NBFIs) sector has increased at an alarming rate. In the first quarter of the current year (January-March), NPLs in the sector surged by BDT 2,100 crore, accounting for 35.31% of the total disbursed loans. According to the latest report from Bangladesh Bank, the current amount of NPLs in the NBFI sector stands at BDT 27,189 crore.

Bankers indicate that financial institutions are currently grappling with liquidity crises and facing intense competition from banks. Moreover, their damaged reputation due to various irregularities is hindering their ability to collect deposits.

Bangladesh Bank data shows that as of the end of March this year, the total loans disbursed by NBFIs in the country amounted to BDT 76,987 crore. This figure was BDT 75,450 crore at the end of December 2024, indicating a new loan increase of BDT 1,537 crore in just three months. Comparatively, total loans stood at BDT 74,389 crore at the end of March 2024, meaning NPLs in financial institutions have grown by BDT 2,598 crore over a year.

During the same period, the total amount of NPLs for financial institutions rose to BDT 27,189 crore, representing 35.31% of total loans. This was up from BDT 25,089 crore at the end of December, a BDT 2,100 crore increase in three months. In March 2024, NPLs in financial institutions were BDT 23,889 crore, marking an increase of BDT 3,300 crore over one year.

A notorious example in Bangladesh's financial history is Prashanta Kumar Halder, also known as PK Halder, who embezzled thousands of crores of taka using state-owned financial institutions and non-bank financial institutions before fleeing the country. The full amount of this scandal has yet to be recovered, and its repercussions continue to affect the entire financial system. To resolve the issues in this sector, transparency in the loan disbursement process, strengthening legal actions for recovery and policies, ensuring accountability in operations, and prosecuting corrupt individuals must be ensured.

Arif Hossain Khan, Executive Director and Spokesperson for Bangladesh Bank, told Kalbela, "Not all financial institutions are weak. Some institutions are doing good business, and their loan recovery is also good. However, having over 35% of loans as non-performing is by no means positive. Therefore, this sector also needs to be reformed. The Bank Resolution Act and the Prompt Corrective Action (PCA) framework must be implemented not only for banks but also for the NBFI sector."

Meanwhile, Dr. Ahsan H. Mansur, Governor of Bangladesh Bank, stated that the central bank is considering dissolving financial institutions burdened with default loans. He told Kalbela, "We have scrutinized these financial institutions. We have seen that 15 to 16 institutions are in a completely damaged state. 99% of their loans are non-performing. We have asked them why their licenses should not be cancelled. We hope to receive a response from them within this week."