New Delhi: Bangladesh has plunged into one of its worst financial crises in recent history, with the country’s banking sector reeling from a huge default on loans, non-bank financial institutions on the verge of collapse and the shares of a large number of companies listed in the stock market trading below their face value, according to a report in the Dhaka Tribune. A vicious cycle of defaulted loans, weak regulation, political influence, corruption, and the dominance of junk companies has left the economy in a precarious state, the report states.
The Asian Development Bank (ADB) recently reported that Bangladesh now has the highest volume of defaulted loans in Asia.
According to the latest estimates from Bangladesh Bank, defaulted loans of commercial banks stood at around Tk6 lakh crore at the end of June. In addition, another Tk3.18 lakh crore in hidden defaults is in the process of being disclosed.
Amid this dire situation, the government has proposed removing the definition of “wilful defaulter” in the draft of the new Banking Company Act. The draft argues that identifying wilful defaulters is complex and not aligned with reality.
However, the amended law of 2023 required every bank to prepare a list of wilful defaulters and submit it to the central bank. In 2024, 20.2 per cent of the country’s total disbursed loans defaulted—28 per cent higher than the previous year. The ADB described Bangladesh as having the “weakest banking system” in Asia. (IANS)
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