NPL ratio falls nearly 3 percentage points in nine months

Country's banking sector saw its non-performing loan (NPL) ratio fall by nearly three percentage points over nine months, although the total volume of classified loans edged higher, according to Bangladesh Bank data.

The NPL ratio stood at 35.73 per cent of total outstanding loans at the end of September 2025, before falling to 32.78 per cent by June this year—a decline of 2.95 percentage points.

Despite the lower ratio, classified loans increased slightly to Tk 606,555 crore in June from Tk 604,515 crore nine months earlier. The June figure accounted for 32.78 per cent of total loans disbursed by banks.

Banking-sector experts attributed the change largely to efforts to identify loans that had previously remained concealed or were shown as regular through repeated rescheduling.

They said the process has brought banks’ actual financial condition into clearer view rather than simply improving headline ratios.

Bangladesh Bank Executive Director and spokesperson Arif Hossain Khan said the central bank had prioritised revealing the sector’s actual condition since August 5, 2024. Loans previously kept out of the classified category or made to appear regular through rescheduling were being identified, he said.

The central bank has also introduced measures including a one-time exit policy and loan rescheduling for up to 15 years to help reduce NPLs. Khan said the ratio could decline further if the measures produce their expected results.

Economist Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), said earlier official figures had not fully reflected the banking sector’s distressed loans.

He noted that officially classified loans rose from about Tk 22,000 crore in 2008 to nearly Tk 2 lakh crore in 2024, while a government white paper estimated actual non-performing and distressed loans at around Tk 6.5 lakh crore.

Rahman welcomed the Bangladesh Bank reforms, saying continued measures were needed to address longstanding weaknesses in the banking sector, revive investment and strengthen domestic resource mobilisation and NPL recovery.