* National Bank of Pakistan: 96.08%
* ICB Islamic Bank: 88.82%
* Padma Bank: 85.73%
* Basic Bank: 64.45%
* Janata Bank: 52.55%
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At least 54 percent of the total defaulted loans in the country's banking sector are concentrated in five banks, while 10 other banks account for 74.5 percent of the remaining defaulted loans, according to the Financial Stability Assessment Report of June 2024 by Bangladesh Bank (BB).
Without disclosing the names of the banks, the report stated that the defaulted loan rate in 11 other banks exceeded 20 percent of their total loans. Experts have warned that if the top three borrowers default, at least 18 banks will face capital deficits, severely impairing their ability to continue regular operations.
The report, published on the BB website, is part of a quarterly analysis of weaknesses and risk levels in banks and financial institutions. Analysts noted that the quality of assets in the banking sector is steadily deteriorating due to the persistent rise in defaulted loans, which is increasing the level of risk.
The report evaluated banks with the highest amounts and rates of defaulted loans. Between April and June 2024, defaulted loans in the banking sector surged by approximately Tk 29,097 crore, raising the total defaulted loans to about Tk 2,11,392 crore by the end of June. This figure represents 12.56 percent of the total loans disbursed.
Non-performing loans (NPLs) in Bangladesh's banking sector are predominantly concentrated in a few institutions. As of June 2024, the top five banks accounted for Tk 1,14,221 crore in NPLs, which is 54.03 percent of the total. These banks are Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, and National Bank. Among them, Janata Bank had the highest defaulted loans at Tk 48,000 crore, or 64.45 percent of its total loans. Agrani Bank followed with Tk 21,325 crore in defaulted loans, representing 30.59 percent of its total loans. National Bank reported Tk 20,929 crore in defaulted loans, which is 48.97 percent of its total loans.
Sonali Bank registered Tk 13,495 crore in defaulted loans, equivalent to 14.81 percent, while Rupali Bank had Tk 10,463 crore in defaulted loans, representing 23.01 percent of its total loans.
A separate report recently published by BB revealed that defaulted loans in the banking sector escalated to about Tk 2,85,000 crore by the end of September 2024, representing 17 percent of the total loans disbursed. The same report highlighted that 11 banks have defaulted loan rates exceeding 20 percent. Alarmingly, the defaulted loan rate at the National Bank of Pakistan reached 96.08 percent, while ICB Islamic Bank reported a defaulted loan rate of 88.82 percent. Padma Bank's defaulted loan rate was 85.73 percent, followed by Basic Bank at 64.45 percent and Janata Bank at 52.55 percent. Other banks with significant defaulted loan rates include Bangladesh Commerce Bank, Bangladesh Development Bank, AB Bank, Agrani Bank, and Rupali Bank.
As of June 2024, eight banks had defaulted loans below 2 percent. Four banks had defaulted loans between 2 and 3 percent, while 15 banks had defaulted loans between 3 and 5 percent. Nineteen banks had defaulted loans between 5 and 10 percent, three banks had defaulted loans between 10 and 15 percent, and one bank had defaulted loans between 15 and 20 percent.
Experts cautioned that if the top three borrowers in the banking sector default, 16 banks would face capital deficits.
Furthermore, under Basel-3 guidelines, banks in Bangladesh are required to maintain a minimum of 10 percent of risk-weighted assets or Tk 4 billion, whichever is higher. As of June 2024, 11 out of 61 scheduled banks failed to meet the minimum Capital to Risk-Weighted Asset Ratio (CRAR). If the top three borrowers from the remaining 50 banks defaulted, another 18 banks would fail to maintain the required CRAR. An increase in defaulted loans by just 3 percent would push five more banks into capital deficits.
The report also revealed a significant shortfall in provision reserves. Against the required Tk 1,14,166 crore, banks had only Tk 79,355 crore in reserve, resulting in a deficit of Tk 24,811 crore.
