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Credit Concentration Across Ten Lenders: Deploying the Bank Resolution Framework

Situation

At the end of June 2026, non-performing loans across Bangladesh reached Tk 6,06,555 crore, or approximately Tk 6.07 trillion, accounting for 32.78% of total disbursed credit in the banking sector [The Daily Star, September 10, 2026]. This ratio positions Bangladesh with the highest default rate in the world, surpassing war-torn Ukraine under IMF Financial Soundness Indicators and African Development Bank metrics [The Daily Star, September 10, 2026]. The systemic threat is defined by intense asset concentration: ten commercial banks hold Tk 4,39,527 crore in bad debt, representing 72.46% of all toxic assets in the national financial system [The Business Standard, September 10, 2026].

Parliament passed the Bank Resolution Amendment Bill 2026 to establish statutory mechanisms for liquidations, mergers, and distressed bank resolution [The Daily Star, September 11, 2026]. Concurrently, Bangladesh Bank ordered mandatory loan utilisation verifications by listed independent audit firms for all exposures exceeding Tk 500 crore [The Business Standard, September 10, 2026]. Policymakers at Bangladesh Bank and the Ministry of Finance must now transition from passive accounting recognition to structured administrative resolution. Halting solvency degradation requires segregating toxic conglomerate assets, ring-fencing failed institutions, and managing depositor liquidity to prevent bank run contagion.

Evidence

  • Sectoral bad-debt trajectory: Classified loans stood at Tk 2,11,391 crore in June 2024 [The Daily Star, September 3, 2026] and rose to Tk 3,45,764 crore in December 2024 [The Daily Star, September 3, 2026]. Defaults reached an all-time peak of Tk 6,44,515 crore, or approximately 35.7% to 36% of disbursements, in September 2025 [The Daily Star, September 3, 2026]. Classified assets stood at Tk 5,57,217 crore, or 30.6% of loans, at the end of December 2025 [Prothom Alo, September 2, 2026], before rising to Tk 5,88,704 crore, or 32.26%, at the end of March 2026 [The Business Standard, September 10, 2026]. Between March 2026 and June 2026, classified loans grew by Tk 17,851 crore to reach Tk 6,06,555 crore, representing 32.78% of all disbursed credit [The Business Standard, September 10, 2026].
  • Global default ranking: A 32.78% non-performing loan ratio gives Bangladesh the world's highest bad-debt rate, overtaking Ukraine based on IMF Financial Soundness Indicators and African Development Bank data [The Daily Star, September 10, 2026].
  • Concentration in ten commercial banks: Ten commercial lenders account for Tk 4,39,527 crore in classified advances, holding 72.46% of total toxic debt across the banking sector [The Business Standard, September 10, 2026].
  • Highest nominal default volumes: Islami Bank Bangladesh PLC carries the largest default volume in the financial system at Tk 98,914 crore, representing 52.15% of its disbursed loans [The Daily Star, September 10, 2026]. Janata Bank carries Tk 75,729 crore, also reported as Tk 75,728 crore, in non-performing loans, equal to 75.05% of its loan portfolio [The Daily Star, September 10, 2026; The Business Standard, September 10, 2026]. EXIM Bank bad loans reached Tk 38,052.53 crore, or 70.81% of its portfolio [The Daily Star, September 10, 2026]. Agrani Bank classified credit stands at Tk 32,133 crore, constituting 43.98% of disbursements [The Daily Star, September 10, 2026].
  • Severe default ratios: First Security Islami Bank reached an NPL ratio of 97.08%, marking the highest default ratio in the sector [The Business Standard, September 10, 2026]. Union Bank recorded an NPL ratio of 96.78% [The Business Standard, September 10, 2026]. Social Islami Bank reported 78.15% [The Business Standard, September 10, 2026]. National Bank recorded 65.74% [The Business Standard, September 10, 2026]. IFIC Bank reported 63.38% [The Business Standard, September 10, 2026]. AB Bank recorded 56.40% [The Business Standard, September 10, 2026].
  • Conglomerate capture: S Alam Group acquired control of Islami Bank Bangladesh PLC in 2017 and subsequently extended roughly 80% of total advances to affiliated entities and proxy companies in breach of credit limits [The Daily Star, September 10, 2026]. Beximco Group accounted for roughly Tk 25,000 crore of classified debt at Janata Bank and obtained approximately Tk 10,000 crore in advances from IFIC Bank despite holding a shareholding stake of only 6% [The Daily Star, September 10, 2026].
  • Depositor run dynamics: Following restructuring at Sammilito Islami Bank PLC, 26,000 customers withdrew Tk 1,040 crore in deposits across a three-day period under relaxed withdrawal allowances [The Business Standard, September 10, 2026].

Prescription

  • Bangladesh Bank must invoke the Bank Resolution Amendment Bill 2026 to take immediate administrative control of the ten commercial banks holding Tk 4,39,527 crore in bad debt [The Daily Star, September 11, 2026; The Business Standard, September 10, 2026]. The central bank must place statutory resolution administrators into First Security Islami Bank, which has an NPL ratio of 97.08% [The Business Standard, September 10, 2026], and Union Bank, which has an NPL ratio of 96.78% [The Business Standard, September 10, 2026], initiating legal procedures for compulsory balance-sheet segregation, operational mergers, or solvent wind-downs.
  • Bangladesh Bank must deploy its directive for mandatory loan utilisation verifications by listed independent audit firms across all exposures exceeding Tk 500 crore [The Business Standard, September 10, 2026]. The Department of Banking Inspection must prioritize tracing insider loans tied to S Alam Group, which absorbed roughly 80% of advances at Islami Bank Bangladesh PLC after its 2017 takeover [The Daily Star, September 10, 2026], and Beximco Group, which accounts for roughly Tk 25,000 crore at Janata Bank and approximately Tk 10,000 crore at IFIC Bank [The Daily Star, September 10, 2026].
  • The Ministry of Finance and Bangladesh Bank must implement structured deposit stabilization protocols to prevent contagion similar to Sammilito Islami Bank PLC, where 26,000 depositors withdrew Tk 1,040 crore over three days [The Business Standard, September 10, 2026]. Bangladesh Bank must enforce calibrated daily withdrawal limits during bank resolution procedures to protect liquidity while ring-fencing retail savings.
  • The Ministry of Finance must segregate bad loans in state lenders, isolating the Tk 75,729 crore, or Tk 75,728 crore, in non-performing assets at Janata Bank [The Daily Star, September 10, 2026; The Business Standard, September 10, 2026] and Tk 32,133 crore at Agrani Bank [The Daily Star, September 10, 2026]. The ministry must transfer these assets to a specialized resolution entity under the Bank Resolution Amendment Bill 2026, conditioning any public capital injections on forensic recovery and asset forfeiture [The Daily Star, September 11, 2026].

Risks and Tradeoffs

Enforcing statutory resolution carries immediate liquidity risks. The rapid outflow of Tk 1,040 crore across three days by 26,000 customers at Sammilito Islami Bank PLC proves that premature or uncoordinated withdrawal relaxations trigger destabilizing deposit runs [The Business Standard, September 10, 2026].

Rigorous balance sheet recognition also threatens direct fiscal exposure. With state-owned Janata Bank burdened by an NPL ratio of 75.05% [The Daily Star, September 10, 2026] and Agrani Bank carrying a default ratio of 43.98% [The Daily Star, September 10, 2026], full provisioning will eliminate institutional capital, forcing the Ministry of Finance to absorb massive recapitalisation burdens.

Finally, legal and recovery enforcement against politically connected groups presents operational friction. S Alam Group proxies control roughly 80% of lending at Islami Bank Bangladesh PLC [The Daily Star, September 10, 2026], and Beximco Group holds roughly Tk 25,000 crore in classified loans at Janata Bank alongside approximately Tk 10,000 crore at IFIC Bank [The Daily Star, September 10, 2026]. Tracing these assets through independent audits on exposures above Tk 500 crore will encounter complex litigation and nominee ownership structures [The Business Standard, September 10, 2026].

Bottom Line

The expansion of classified credit to Tk 6,06,555 crore demonstrates that systemic failure is heavily concentrated in ten commercial banks holding Tk 4,39,527 crore, or 72.46% of all bad loans in Bangladesh [The Daily Star, September 10, 2026; The Business Standard, September 10, 2026]. Bangladesh Bank and the Ministry of Finance must immediately deploy the Bank Resolution Amendment Bill 2026 to restructure these institutions, enforcing mandatory independent audits on all credit lines exceeding Tk 500 crore to ring-fence system stability [The Daily Star, September 11, 2026; The Business Standard, September 10, 2026].

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Sources

  • At the end of June 2026, non-performing loans (NPLs) across Bangladesh’s banking sector reached Tk 6,06,555 crore (approximately Tk 6.07 trillion), accounting for 32.78% of total disbursed loans. [The Daily Star, Prothom Alo English, Dhaka Tribune, The Business Standard, September 2–10, 2026]
  • Between March and June 2026, NPLs grew by Tk 17,851 crore, rising from Tk 5,88,704 crore (32.26%) at the end of March 2026. [The Business Standard, Prothom Alo English, September 10, 2026; September 2, 2026]
  • A 32.78% bad-debt ratio positions Bangladesh with the world's highest NPL rate, overtaking even war-torn Ukraine, based on IMF Financial Soundness Indicators and African Development Bank data. [The Daily Star, Dhaka Tribune, September 10, 2026; September 3, 2026]
  • Classified loans stood at Tk 2,11,391 crore in June 2024, rose to Tk 3,45,764 crore in December 2024, hit an all-time peak of Tk 6,44,515 crore (~35.7%–36%) in September 2025, and stood at Tk 5,57,217 crore (30.6%) at the end of December 2025. [The Daily Star, Prothom Alo, September 3, 2026; September 2, 2026]
  • Ten commercial banks hold Tk 4,39,527 crore in bad debt, representing 72.46% of all toxic assets in the financial system. [The Business Standard, The Daily Star, September 10, 2026]
  • Islami Bank Bangladesh PLC holds the highest NPL volume in the entire sector at Tk 98,914 crore, representing 52.15% of its disbursed loans. [The Daily Star, September 10, 2026]
  • Janata Bank carries Tk 75,729 crore (reported as Tk 75,728 crore in TBS) in NPL volume, equivalent to 75.05% of its total disbursed loans. [The Daily Star & The Business Standard, September 10, 2026]
  • EXIM Bank bad loans stood at Tk 38,052.53 crore, or 70.81% of its loan portfolio. [The Daily Star & The Business Standard, September 10, 2026]
  • Agrani Bank classified loans reached Tk 32,133 crore, constituting 43.98% of total disbursements. [The Daily Star & The Business Standard, September 10, 2026]
  • First Security Islami Bank reached an NPL ratio of 97.08%, the highest default ratio in the sector. [The Business Standard, September 10, 2026]
  • Union Bank, Social Islami Bank, National Bank, IFIC Bank, and AB Bank reported NPL ratios of 96.78%, 78.15%, 65.74%, 63.38%, and 56.40%, respectively. [The Business Standard, September 10, 2026]
  • S Alam Group took over Islami Bank in 2017 and subsequently extended roughly 80% of the bank's total advances to its own companies and proxy entities in breach of credit limits. [The Daily Star, September 10, 2026]
  • Beximco Group accounted for roughly Tk 25,000 crore of Janata Bank’s classified exposure and secured approximately Tk 10,000 crore in advances from IFIC Bank despite holding only a 6% shareholding stake. [The Daily Star, September 10, 2026]
  • Parliament passed the Bank Resolution Amendment Bill 2026 to establish legal frameworks for handling distressed banks, liquidations, and mergers. [The Daily Star, September 11, 2026]
  • Bangladesh Bank issued an order making listed independent audit firms mandatory to verify loan utilisation for all credit exposures exceeding Tk 500 crore. [The Business Standard, September 10, 2026]
  • 26,000 customers of the restructured Sammilito Islami Bank PLC withdrew Tk 1,040 crore in deposits over a three-day period under relaxed withdrawal allowances. [The Business Standard, September 10, 2026]

Grounded in 20 source documents in the evidence record.

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Topics ranked by gemini-3.8-flash; prescription drafted by gemini-3.8-flash; grounding verified by gemini-3.8-flash. Generated 2026-09-11T11:40:16.165686+00:00.