Default loans in Bangladesh climb by 16%, reaching record Tk 2.11tn

Recent figures reveal an increase in both in total amount and percentage terms

Defaulted loans in the banking sector have surged to a record high of Tk 2.11 trillion, with a 16 percent increase reported over the last three months.

The increase in defaulted loans amounts to Tk 290.6 billion from the previous quarter, the latest data from Bangladesh Bank showed on Tuesday.

Mezbaul Haque, spokesperson and executive director of Bangladesh Bank, told bdnews24.com: “The classified loan ratio as of June stands at 12.56 percent of the total outstanding loans.”

As of the end of June 2024, the total amount of loans disbursed by banks has reached Tk 16.83 trillion.

Compared to June 2023, the amount of defaulted loans increased by Tk 553.52 billion, a 35.47 percent rise.

Not only did the amount increase, but the percentage of defaulted loans also saw a rise in the last three months.

In March 2024, defaulted loans in the banking sector were Tk 1.82 trillion, accounting for 11.11 percent of the total loans.

In December 2023, the default rate was 9 percent.

Regarding the sharp rise in defaulted loans, former caretaker government advisor AB Mirza Md Azizul Islam told bdnews24.com: “The actual amount of defaulted loans is likely higher than what Bangladesh Bank reports.”

“Rescheduled loans are also defaulted loans, but the central bank does not reflect that in its data.”

He hopes that the new governor, Ahsan H Mansur, will take steps to bring defaulters to justice.

"Defaulted loans are one of the major issues in the banking sector," he said.