The newly-elected government led by the Bangladesh Nationalist Party (BNP) has taken charge of a crisis-ridden economy, reports Daily Sun.
However, the condition of the banking sector—considered the lifeline of the economy—is far from reassuring.
With nearly Tk6.5 lakh crore in defaulted loans, $234 billion siphoned abroad, and a disorderly banking system, the sector is now looking to the government for urgent action.
Stakeholders believe that restoring governance in banks, recovering defaulted loans, and curbing money laundering will be the biggest challenges for the new administration in stabilizing the economy.
During the tenure of the Awami League government, prolonged irregularities, weak oversight, and unplanned loan disbursement placed the sector under severe strain. Former Managing Director of Mutual Trust Bank, Anis A Khan, said structural reforms are essential for sustainable recovery.
He suggested forming a new task force to identify weaknesses in the banking system, particularly to address the issue of defaulted loans. Without strong management and targeted initiatives, he warned, the sector could face further damage.
According to September 2025 data from Bangladesh Bank, more than one-third of all disbursed loans have now turned defaulted. Total defaulted loans stand at nearly Tk 6.5 lakh crore, representing 35.73 percent of the Tk 18,03,840 crore in total outstanding loans.
During the previous government, there were allegations that defaulted loans were underreported. Now, the actual picture is emerging. When the Awami League-led alliance came to power in January 2009, defaulted loans stood at Tk 22,481 crore.
Former Bangladesh Bank Governor Farashuddin Ahmed emphasized that restoring discipline in the economy must be the top priority. He said that ensuring governance would prevent fraudulent lending, curb hundi (informal money transfers), and increase remittances and foreign exchange reserves.
He described defaulted loans as a “cancer” in the banking sector, saying there is no alternative to resolving the issue. He also stressed the need to reduce inflation and increase revenue collection.
According to Bangladesh Bank, during the interim government’s tenure, boards of 14 banks were dissolved, six banks were merged, and Tk 52,500 crore in liquidity support was provided. Several ordinances were enacted, and the policy interest rate was raised to 10 percent. Despite these steps, the sector has not yet reached the desired level of stability.
Bangladesh Bank has stated that raising policy rates alone cannot reduce inflation; controlling supply chains is also essential. However, the interim government claims success in reducing hundi activities, which contributed to increased remittances and foreign exchange reserves. When former Prime Minister Sheikh Hasina left the country, reserves stood at $20 billion. By the end of the interim government’s tenure, reserves had exceeded $29 billion.
According to the White Paper Committee formed by the interim government to assess the state of the economy, over the past 15 years a system of “crony capitalism” evolved into what it described as a “kleptocracy,” involving politicians, military and civil officials, and members of the judiciary. The committee claims that $234 billion was illicitly transferred abroad through 28 different channels during this period.
Chairman of Agrani Bank, Syed Abu Naser Bakhtiar, said Bangladesh Bank has performed well over the past year and a half in controlling hundi and stabilizing the foreign exchange market. As a result, exchange rates remained relatively stable. Banks also increased promotional efforts in remittance-sending countries, boosting inflows and strengthening reserves.
He added that the new government should adopt a zero-tolerance policy against hundi and announce a comprehensive program to restore governance in the banking sector.
Bd-Pratidin English/ AM
