The crisis of defaulted loans in the country’s banking sector is deepening. The tendency to fail to repay has risen alarmingly, particularly among retail loan customers. Over the past year the number of bank accounts carrying classified (defaulted) loans has more than doubled, reaching about 46 lakh at the end of March this year. Most of these are accounts for loans of up to 1 crore taka, which points to rising financial pressure on ordinary customers, small entrepreneurs and small traders.
The figures come from Bangladesh Bank’s latest report, “Banking Sector Update.”
According to the report, the number of accounts with defaulted loans of up to 1 crore taka stood at 45 lakh 43 thousand at the end of March 2026, against 21 lakh 63 thousand at the same time a year earlier. That is, the number of such defaulted accounts has more than doubled in the space of a single year.
The central bank says this deterioration in retail loan repayment is an important warning signal for the country’s economy. With high inflation, rising living costs, the pressure of household debt, stagnation in the small and medium enterprise (SME) sector and falling incomes in agriculture and small business, many customers are struggling to pay their loan instalments.
The report also notes that while large defaulted loans create immediate risk in the banking sector, the default of a very large number of small loan accounts signals deep financial weakness within the economy, because it reflects a decline in ordinary people’s financial capacity.
According to Bangladesh Bank data, the ratio of defaulted loans to total outstanding loans has also risen significantly. Where the rate was 24.6 percent in March 2025, by the end of March 2026 it had risen to 32.7 percent.
A bank-by-bank analysis in the report shows that state-owned and Islamic banks are at the greatest risk. In the central bank’s view, the effect of governance shortcomings and weak loan management is clear at these banks. At foreign banks, on the other hand, the rate of defaulted loans is comparatively much lower because of strict risk management and loan appraisal methods.
Bangladesh Bank also said that, apart from new banks established after 2016 and foreign banks, the volume of retail lending has also risen over the past year at most state-owned, private and Islamic banks. But the number of defaulted accounts has risen along with it.
A sector-by-sector analysis shows the cottage industry sector is currently at the greatest risk. The rate of defaulted loans in this sector is 52.8 percent, far higher than in other sectors.
The report also said the rate of defaulted loans has risen over the past year in almost every sector — business, agriculture and industry. This has created fresh concern about the quality of the banking sector’s assets, loan recovery and financial stability.
In experts’ view, effective steps are needed to restore the financial capacity not only of large borrowers but of small and retail borrowers as well in order to control defaulted loans. At the same time, unless risk appraisal in approving loans is strengthened further and regular monitoring increased, this pressure on the banking sector could grow.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report