Bangladesh’s banking sector is grappling with a severe financial crisis, as 22 out of the country’s 61 banks have slipped into cumulative losses. A comprehensive report presented by Bangladesh Bank to the Parliamentary Standing Committee on the Ministry of Finance revealed that accumulated losses across these institutions reached a staggering 254,000 crore taka by the end of March 2026. Although the sector recorded an overall operating profit of 789 crore taka during the same period, necessary adjustments for provisioning and non-performing loans dragged the entire banking industry into a net loss of 8,417 crore taka.

The Central Bank attributed this deep profitability squeeze to high rates of classified loans, capital shortfalls, weak asset quality, and mandatory provisioning requirements. The affected institutions include four state-owned commercial entities—Janata, Agrani, Rupali, and BASIC Bank—alongside specialised institutions like Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank, as well as the foreign lender National Bank of Pakistan. Additionally, 15 private commercial banks are currently languishing in red ink, including AB Bank, Bangladesh Commerce Bank, EXIM Bank, First Security Islami Bank, ICB Islamic Bank, IFIC Bank, Islami Bank Bangladesh, Meghna Bank, National Bank, Global Islami Bank, Padma Bank, Shimanto Bank, Social Islami Bank, The Premier Bank, and Union Bank.

The root causes of this distress stem from years of rampant irregularity, institutional corruption, and aggressive loan disbursement. Nine of the 12 private banks facing severe distress were previously under the control of politicians and affiliated business figures linked to the former Awami League administration. During this period, vast sums were systematically drained from these lenders through fraudulent credit facilities. Addressing the situation, Syed Abu Naser Bukhtear Ahmed, Chairman of Agrani Bank, acknowledged that the structural damage inflicted over 15 years cannot be undone overnight, though concerted recovery efforts are now under way.

Compounding the problem, non-performing loans (NPLs) across the entire system surged to 607,000 crore taka by 30 June 2026, accounting for nearly 33 per cent of total outstanding credit. Zahid Hussain, former lead economist at the World Bank’s Dhaka office, warned that having over a third of the nation’s banks operating at a loss, coupled with a 33 per cent default rate, poses a direct threat to public confidence in the broader financial system.

Liquidity pressures have also escalated significantly. By March 2026, 15 lenders had failed to maintain the mandatory minimum capital reserves. To prevent systemic collapse, the central bank disbursed roughly 85,000 crore taka in emergency liquidity support to 12 distressed institutions as of 27 September.

During the parliamentary meeting chaired by Mushfiqur Rahman, committee members discussed urgent structural reforms. Hasnat Abdullah, MP representing the National Citizens Committee (NCP), submitted formal reform proposals to curb default loans permanently, while Saiful Alam MP presented a written framework on behalf of Jamaat-e-Islami. Saiful Alam later remarked to reporters that Bangladesh has far too many financial institutions for its economic size and suggested consolidating the sector.

Finance Minister Amir Khosru Mahmud Chowdhury reassured the committee that the government remains committed to total transparency, asserting that political interference in the appointment of bank chairmen and directors will no longer be tolerated.