Sunday, 5th April 2026
Khabor Wala Desk
Published: 28th January 2026, 11:51 AM
In an effort to address the escalating crisis of defaulted loans in Bangladesh, the Association of Bankers, Bangladesh (ABB)—the collective of chief executives from the country’s banking sector—has submitted a comprehensive set of proposals to Bangladesh Bank. These measures aim to curb non-performing loans (NPLs) and enhance cash recovery.
Among the most notable suggestions are: prohibiting loan defaulters from travelling abroad without court approval, permitting banks to publish defaulters’ names and photographs, and barring them from participating in any business association elections.
The proposals follow a meeting with Bangladesh Bank Governor Ahsan H. Mansur on 12 November last year, after which ABB submitted a detailed memorandum outlining practical reforms. The organisation emphasises that these reforms are crucial to both reduce the proportion of defaulted loans and increase the efficiency of recovery.
The ABB’s recommendations can be grouped into four categories: reducing defaulted loans, improving cash collection, facilitating collateral sales, and expediting legal proceedings.
| Category | Key Proposals |
|---|---|
| Reducing Defaulted Loans | 1. Allow partial write-offs of non-performing loans in accordance with international standards. 2. Ensure immediate support from relevant authorities for the liquidation of pledged shares. 3. Relax conditions for accelerated recovery of loans in cases of death, terminal illness, natural disasters, or for personal, housing, credit card, and small business loans. |
| Cash Recovery Measures | 1. Restrict defaulters’ overseas travel without bank or court approval. 2. Authorise banks to publish defaulters’ names and photographs. 3. Prevent defaulters from participating in any business organisation elections. |
| Collateral Sales | 1. Withdraw all taxes and VAT on auctioned or acquired properties. 2. Provide tax incentives to auction purchasers. 3. Remove the requirement for district administration approval for property purchases at auction. 4. Ensure full cooperation from sub-registries in property transfer. 5. Allow banks to survey and assess land in the absence of mortgagors. 6. Automatically register court-ordered property transfers in the bank’s name. |
| Legal Enforcement | 1. Access defaulters’ deposits, savings certificates, tax returns, and asset information without court intervention. 2. Require specific down payments for court proceedings against bank measures. 3. Remove legal provisions allowing stay orders against bank actions. 4. Ensure strict adherence to payment conditions if stay orders are granted; non-compliance would void the order. 5. Establish separate financial courts in districts with high numbers of defaulters. 6. Expedite implementation of arrest orders and restrict personal appearances in financial cases. 7. Extend the enforceable period of civil arrest warrants from six months to seven years depending on loan size. 8. Implement rapid amendments to financial laws. |
Sources from the banking sector report that more than one-third of all loans issued are now non-performing. As of September last year:
Total loans disbursed: BDT 18,03,840 crore
Non-performing loans (NPLs): 35.73% (~BDT 6,50,000 crore)
Bankers note that previous governments often underreported NPLs to present a healthier banking sector. Current transparency, however, reveals the true scale, and the trend indicates that the ratio of non-performing loans may increase further in the coming months.
The ABB asserts that without such sweeping reforms, including travel restrictions, disclosure of defaulters’ identities, and enhanced legal enforcement, the banking sector will struggle to stem the growing tide of loan defaults—a challenge with potentially significant ramifications for the national economy.
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