Bangladesh Loan Default Rate Hits 31%: On March 29, 2026, Bangladesh’s banking sector revealed a significant rise in the default rate on large loans, reaching 31.20% for accounts with loans exceeding Tk1 crore. This increase was reported by Bangladesh Bank, showing a stark rise from 19.90% a year prior.
By the end of December 2025, the total amount of defaulted loans on these large accounts stood at approximately Tk554,486 crore. This surge in defaults is attributed to new loan classification policies aligning with international standards, which have clarified the actual picture of loan defaults.
A senior official from Bangladesh Bank explained that the loan classification rules have been adjusted to consider a loan as default after 90 days of non-payment, down from the previous 180 days. This change has led to a significant increase in reported defaulted loans over the past year.
Despite the alarming rise, there was a slight decrease in the default rate in the December quarter compared to September, dropping from 36.30%. This decrease is partly due to policy support and loan write-offs provided by Bangladesh Bank.
Bankers have indicated that the increase in defaulted loans over the past 18 months reflects the exposure of previously hidden non-performing loans. The verification of bank assets by foreign audit firms has also contributed to revealing the true extent of non-performing loans, particularly within the combined Islamic banking system.
The culture of irregularities and corruption in the banking sector is now evident, with major corporate institutions like S Alam Group and Beximco Group among those defaulting. Additionally, the repercussions of the Basic Bank scandal continue to affect the sector.
Published in SouthAsianDesk, March 29, 2026
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