Defaulted loans from Bangladesh's nine state-owned banks have risen to nearly Tk 1.89 trillion, prompting the government to begin overall banking-sector overhaul, the finance minister told parliament on Sunday.)
A series of short-, medium- and long-term reforms are being carried out for restoring discipline in the banking sector, said Amir Khasru Mahmud Chowdhury.
Responding to a supplementary question from reserved-seat lawmaker Sabikunnahar during the 23rd sitting of the second session-the first budget session under this government-of the 13th Jatiya Sangsad, the finance minister said total default loans from the state-owned banks stood at Tk 1,88,701.75 crore as of May 31.
The figures were compiled using data submitted to the Bangladesh Bank's Credit Information Bureau (CIB) by the nine state-owned lenders: Agrani Bank PLC, Janata Bank PLC, Rupali Bank PLC, Sonali Bank PLC, BASIC Bank PLC, Bangladesh Development Bank PLC, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and Probashi Kalyan Bank.
Presided over by Speaker Hafiz Uddin Ahmed, the parliamentary session heard the finance minister stress that reducing the high volume of non-performing loans is essential to restoring order in the banking sector.
He notes that the issue has been given special importance in the government's election manifesto.
To address the problem, Bangladesh Bank has adopted a comprehensive reform strategy.
In the short term, the central bank is preparing guidelines on classified loan- resolution strategies and updating its credit-risk-management framework in line with international standards.
The medium-term plan includes implementing the International Financial Reporting Standard (IFRS-9), introducing accredited institutions to assess collateral value, updating agricultural loan-rescheduling policies, providing incentives to bank officials for recovering defaulted loans, and strengthening reward schemes for regular borrowers.
Long-term measures include setting a cap on the total amount an individual borrower can obtain from the entire banking sector, taking stricter action against willful defaulters, appointing experienced bankers to panels of judges in Money Loan Courts, preventing delays in loan recovery caused by writ petitions, and enacting legislation to establish private-sector asset-management companies.
The finance minister also has said the government has enacted the Bank Resolution Act 2026 to ensure effective management of troubled banks. In addition, it is preparing the Deposit Protection Act 2026 to safeguard depositors' interests.l
And amendments to the laws governing Bangladesh Bank, the Insurance Development and Regulatory Authority (IDRA), Bangladesh Securities and Exchange Commission (BSEC), as well as revisions of the Negotiable Instruments Act, have strengthened the legal framework for addressing cheque fraud and improving the adjudication of cheque-dishonour cases.
"The government is working to restore discipline in the financial sector through a stronger legal framework, a transparent bank-resolution process and enhanced protection for depositors," he told the House.
To another supplementary from Gazipur-4 lawmaker Salauddin, the finance minister said investigations were underway into irregularities, corruption and large-scale financial misappropriation that occurred in the banking sector over the past several years, including at Probashi Kalyan Bank.
He reaffirms that restoring order in the financial sector remains one of the government's highest priorities and describes the ongoing reforms as a comprehensive "cleaning process" across the sector.
During the session, Salauddin alleged that under the previous government, billions of taka had been siphoned off from Probashi Kalyan Bank through "politically influenced loan approvals, bribery and syndicate-based corruption".
As a result, he claims, nearly 61 per cent of the bank's loans have become non-performing. He also alleges that the same syndicates continue attempting to influence loan approvals and disbursements, calling for a thorough investigation and the dismantling of the nexus.
In response, the finance minister makes it clear that the investigation is not limited to a single institution but covers multiple banks.
He notes that action has already been taken against a number of individuals and acknowledges that the financial sector's longstanding irregularities cannot be eliminated overnight, but pledges that the cleanup drive would continue.
mirmostafiz@yahoo.com
