Bangladesh Financial System Faces Deep Crisis
Bangladesh is grappling with a severe financial crisis as loan defaults surge across banks and non-bank institutions. According to central bank data, defaulted loans had reached about Tk 6 lakh crore by June 2025. Analysts warn that when hidden defaults—those under court proceedings, write-offs, or stay orders—are fully accounted for, the total could approach Tk 9 lakh crore.
Banking, NBFIs, and Capital Markets Strain
The crisis is not confined to banks. Non-bank financial institutions (NBFIs) have seen up to 83 percent of their loan book turn nonperforming. The combined stress has shaken investor confidence, and the stock market has tumbled. The trio of banking, NBFIs, and capital markets are now under strain simultaneously.
Underlying Causes and Risks
Observers attribute the crisis to weak regulatory oversight, political interference, corruption, and poor loan recovery mechanisms. Some warn that unless decisive corrective steps are taken, the entire financial system could collapse. The current instability also weakens Bangladesh’s wider macroeconomic resilience, adding pressure on foreign exchange reserves, credit flow, and growth prospects.
Outlook and Possible Remedies
To stabilize the system, experts suggest stricter enforcement of banking norms, recapitalization of distressed institutions, improved governance, and better coordination among regulators. The government and central bank must act swiftly to prevent contagion and restore public trust.
