Bangladesh Bank disputes 60pc distressed-loan estimate

Bangladesh Bank has challenged media reports that estimated distressed loans in the country's banking sector at as much as 60% of total outstanding credit, arguing that the methodology used to calculate the figures does not conform to accepted banking practices.

The central bank's response came after several reports, citing data from its Financial Stability Report (FSR) 2025, combined non-performing loans, rescheduled loans, loans under court stay orders and written-off loans to estimate that between 45% and 60% of the banking sector's loan portfolio could be considered distressed.

In a press statement issued on Wednesday, Bangladesh Bank said there is no internationally recognised definition of "distressed loans" and argued that certain categories, including rescheduled loans that are being repaid and written-off loans that no longer remain on banks' balance sheets, should not automatically be grouped together as distressed assets.

The central bank said such calculations could create misleading perceptions about the health of the banking sector.

The dispute centres on methodology rather than the underlying data.

The FSR shows that non-performing loans stood at Tk 5.57 trillion at the end of 2025, while unclassified rescheduled loans, loans under stay orders and written-off loans amounted to several trillion taka more.

While Bangladesh Bank rejected broader distressed-loan estimates, it acknowledged that the banking sector's non-performing loan ratio reached 30.6% at the end of 2025, underscoring the scale of stress facing the financial system.

Economists say the debate highlights a broader concern that a substantial portion of bank lending is either already impaired or subject to elevated repayment risks.