[🇧🇩] Banking System in Bangladesh

[Saif]

Banks born of political favour now drowning in bad debt

Three of the nine banks that entered the market in 2013 after receiving licences from the then Awami League government are now weighed down by non-performing loans (NPLs), according to Bangladesh Bank data and audited financial statements.

www.thedailystar.net

Banks born of political favour now drowning in bad debt

Economists say banks approved on non-financial grounds were bound to run into trouble

Ahsan Habib and Md Mehedi Hasan

Three of the nine banks that entered the market in 2013 after receiving licences from the then Awami League government are now weighed down by non-performing loans (NPLs), according to Bangladesh Bank data and audited financial statements.

Of the remaining six, two have double -digit NPLs, while three have NPL ratios above the tolerable threshold.

At the time the licences were granted, there were allegations that political considerations, rather than financial merit, had influenced the decision. Economists say approving banks on political grounds rather than financial need has contributed to the sector’s current woes.

The nine new-generation lenders are Padma Bank, NRB Commercial Bank, NRB Bank, Global Islami Bank, Union Bank, Modhumoti Bank, Midland Bank, Meghna Bank and South Bangla Agriculture & Commerce (SBAC) Bank.

Global Islami Bank and Union Bank have since been folded into Sammilito Islami Bank, along with four other troubled lenders. Their deteriorating financial health came to light after the 2024 political changeover exposed bad loans that had long been concealed.

Both banks were controlled by the controversial S Alam Group and, by the time of the merger, Tk 97 of every Tk 100 they had lent had gone bad.


Union Bank made a profit of Tk 160 crore in 2023, then posted a loss of Tk 25,790 crore in 2024. By June this year, its non-performing loans reached Tk 27,134 crore, or 97 percent of total lending.

Global Islami Bank posted a profit of Tk 128 crore in 2023. The following year, it recorded a loss of Tk 1,246 crore. Its bad loans jumped from Tk 221 crore to Tk 12,661 crore in 2024 and stood at Tk 14,219 crore, or 97.27 percent of total loans, by June this year.


Padma Bank is in almost as dire a state, having struggled for years to return money to depositors. By June, its bad loans had reached Tk 4,933 crore, or 89 percent of its loan book.

It has not published accounts for a couple of years, and the Bangladesh Bank (BB) is now considering a merger.

NRB Commercial Bank and SBAC Bank are in less critical but still dangerous territory, with bad loan ratios of 21 percent and 16 percent respectively.

NRB Bank, Modhumoti Bank and Meghna Bank all have single-digit bad loan ratios, but each is above the 5 percent ceiling that regulators generally regard as safe.

Midland Bank stands out as the exception.

It has remained profitable while its bad loans increased only slightly, from Tk 182 crore in 2023 to Tk 189 crore in 2025. But asset quality deteriorated in the first half of 2026, with bad loans reaching Tk 412 crore, or 5.67 percent of total loans, by June.

THE WALKING WOUNDED

Of the nine commercial lenders, SBAC Bank and NRB Commercial Bank have double-digit NPL ratios as their profits have fallen in recent years.

SBAC Bank’s profit fell from Tk 54 crore in 2023 to just Tk 70 lakh in 2025, while bad loans surged from Tk 460 crore to Tk 1,724 crore.

By June this year, bad loans stood at Tk 1,557.27 crore, or 16.27 percent of total loans.

NRB Commercial Bank has followed a similar trajectory. Its profit fell from Tk 198 crore in 2023 to just Tk 7 crore in 2024, before recovering to Tk 13 crore in 2025.

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Over the same period, bad loans climbed from Tk 615 crore to Tk 2,524 crore. By June this year, they had risen further to Tk 3,218.78 crore, or 21.43 percent of total loans.

“We are now busy reducing our bad loans,” said Md Touhidul Alam Khan, the bank’s managing director and chief executive officer.

He said that before he joined, NRB Commercial Bank’s provision shortfall stood at Tk 3,600 crore, which has since fallen to Tk 802 crore.

The bank aims to bring bad loans below 20 percent, Touhidul said, adding, “We are trying to reduce the bad loans through the one-time exit policy, easy loan rescheduling and other policy support introduced by the banking regulator.”

STILL ABOVE THE SAFE THRESHOLD

NPL levels at NRB Bank, Meghna Bank and Modhumoti Bank are in single digits but are above the 5 percent level considered safe.

Bad loans at NRB Bank climbed from Tk 255 crore in 2023 to Tk 749 crore in 2024, before easing to Tk 593 crore in 2025 and Tk 585 crore, or 7.58 percent of total loans, by June this year.

Tarek Reaz Khan, managing director and chief executive officer of NRB Bank, said the bank has recovered a significant share of its bad loans through BB’s policy support and legal action.

By August this year, the bad loan ratio had fallen further to 7.40 percent, with a target of 5 percent by year-end. “NRB Bank now has strong liquidity,” Tarek added.

Over the past three years, Meghna Bank has expanded rapidly, with both loans and deposits increasing.

But its profit has slumped from Tk 77 crore in 2023 to just Tk 5 crore in 2025. During the same period, its bad loans rose.

By the end of June this year, its bad loans rose further to Tk 432.87 crore, or 5.60 percent of total loans, according to BB data.

Similarly, Modhumoti Bank’s profit fell from Tk 125 crore in 2024 to just Tk 6 crore in 2025, while bad loans reached Tk 561 crore by June, or 6.88 percent of total loans.

A SECOND ROUND, THE SAME STORY

A second round of bank approvals by the Awami League government followed in late 2018 and 2019, bringing Community Bank, Bengal Commercial Bank, Citizens Bank and Shimanto Bank to the market.

Among them, Community Bank is in the strongest position. Its profit rose from Tk 71 crore in 2024 to Tk 102 crore in 2025, while its bad loans had fallen by June to just Tk 5.32 crore, or 0.33 percent of total loans.

Citizens Bank, established in 2020, has also kept bad loans low while expanding quickly, although its profit was just Tk 2 crore in 2025. Its NPLs stood at Tk 162.46 crore, or 2.65 percent of total loans, by June this year.

Bengal Commercial Bank’s profit fell last year, but its deposits and loans grew strongly.

“As a new bank, the overall performance of Bengal Commercial Bank is not bad,” said its managing director, KM Awlad Hossain.

“Some loans were turning overdue because of the wider business climate. We are focusing on loan recovery through different methods, including loan rescheduling and cash recovery,” he told The Daily Star.

Meanwhile, Shimanto Bank’s financial performance has also deteriorated.

Its profit rose from Tk 24 crore in 2023 to Tk 39 crore in 2024, then swung to a loss of Tk 82 crore in 2025 as bad loans jumped from Tk 11.68 crore to Tk 151 crore. By June this year, they had eased slightly to Tk 133.73 crore, or 4.88 percent of total loans.

Banks approved in 2013, and those approved later should not be compared directly because newer banks generally face fewer asset-quality problems in their initial years of operation.

POLITICAL PRICE

Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development and a former chief economist of BB, said the country is now seeing the results of banks that were approved because of political considerations.

He said the approval of financial institutions and the appointment of their officials should rest on financial rather than political grounds.

“If that happens, then we can see good results,” he said, adding that the then finance minister had himself acknowledged the banks got licences on political considerations.

“If you take any policy based on political considerations, then you must fail, or there will be no good results,” he told The Daily Star.

“Not only those banks, but the country’s banking sector as a whole is now struggling due to political influence. We should come out of such practices; otherwise the banking sector will not recover soon,” the economist added.​

 

[Bilal9]

https://www.newagebd.net/post/banking/315249/four-more-digital-banks-get-bbs-initial-approval

Four more digital banks get BB’s initial approval
Staff Correspondent . Dhaka 25 September, 2026, 00:52

The Bangladesh Bank has given initial approval to four more digital banks.
View attachment 29392

The four new applicants are bKash Digital Bank, sponsored by bKash shareholders, Digital Banking of Bhutan, backed by Bhutan’s DK Bank, Nova Digital Bank, sponsored by Vion, the parent company of Banglalink, and Boost Digital Bank, sponsored by Robi Axiata Ltd.

The central bank also allowed Nagad Digital Bank PLC and Kori Digital Bank PLC, approved during the Awami League government, to move ahead under revised conditions.

The decisions were taken at a board meeting on Thursday chaired by governor Md Mostaqur Rahman.

The four new applicants are bKash Digital Bank, sponsored by bKash shareholders, Digital Banking of Bhutan, backed by Bhutan’s DK Bank, Nova Digital Bank, sponsored by Vion, the parent company of Banglalink, and Boost Digital Bank, sponsored by Robi Axiata Ltd.

The new framework requires each digital bank to start with Tk 300 crore in paid-up capital, compared with the previous requirement of Tk 125 crore. The capital must be fully paid in cash.

The central bank will also introduce a trial period before granting final licences. Newly approved banks will have to operate for six months on a trial basis and meet regulatory requirements before receiving final approval. Failure to do so could result in the final licence being withheld.

Bangladesh Bank issued Nagad’s final licence in June 2024, shortly before the fall of the Awami League government.

It had earlier issued letters of intent to Nagad and Kori at its August 2023 board meeting. The central bank later suspended Nagad’s licence following allegations concerning the ownership and funding of companies involved in the bank.

Kori faced a similar problem. Its main sponsor is technology company Technohaven, founded by Habibullah Nayeemul Karim, husband of former finance secretary Fatima Yasmin. Bangladesh Bank could not obtain information on four US-registered companies linked to its ownership.

A Bangladesh Bank official said Nagad’s licence had already been issued, while Kori’s letter of intent remained valid. Both can proceed if they accept the new conditions, but controversial or absconding sponsors cannot remain involved.

Bangladesh Bank invited applications for digital banks in June 2023, receiving 52 applications. Nagad and Kori were the only two initially approved.​

Digital Banks are a bad idea. They are the equivalent of Hai Hai Company. Everything is in the cloud, and they can vanish at a moment's notice.
This kind of thing already happened in the US. Deposits are not guaranteed by the central bank (US Reserve). I don't think Bangladesh Bank should encourage these companies.

Taka marar ek number fondi.

 

[Saif]

Financial sector safeguard project up for govt approval

A financial-sector project for promoting technology-enabled banking to check NPL buildup and fiscal scams is up for government seal of approval, officials say. Checking digital heist and cyberattack into financial institutions is one of core objectives of the comprehensive project. Banglades

thefinancialexpress.com.bd

Financial sector safeguard project up for govt approval
Technology-enabled banking to check NPL buildup, fiscal scams in focus

A financial-sector project for promoting technology-enabled banking to check NPL buildup and fiscal scams is up for government seal of approval, officials say.

Checking digital heist and cyberattack into financial institutions is one of core objectives of the comprehensive project.

Bangladesh Bank is going to execute the scheme to strengthen safeguards for the country's financial sector through technology-enabled banking, the officials said Monday.

"Under the US$400-million financial support from the World Bank, the central bank is going to implement the Financial Sector Support Project-II (FSSP-II) for conducting massive reforms and improvement in the country's banking operations," said one official.

Bangladesh Bank officials have said they will strengthen supervisory capacity and ICT systems through development of ICT infrastructure and capacity building of the financial sector in Bangladesh.

At a cost of Tk 12.76 billion, the project is likely to be approved by the Executive Committee of the National Economic Council (ECNEC) at its meeting today (Tuesday).

Following numerous challenges facing the country's banking sector, including high levels of NPLs, weak governance, liquidity and capital pressures in some banks, and outdated information and communication technology (ICT) systems, the central bank has undertaken the project.

The NPLs in Bangladesh's banking sector ballooned to Tk 6.06 trillion as of June 2026, representing 32.78 per cent of total disbursed loans, central bank data showed.

According to the BB, the project will also provide advisory and consultancy services to improve institutional capacity and procurement related to ICT infrastructure.

A senior central bank official said, "Strengthening the financial-sector safeguards, technology-enabled banking and banking-sector reforms are among the core objectives of the project."

On completion of the project, the country's banking system will be "very tech-driven and scam like the reserve heist in 2016 would be checked", he hopes.

The central bank will strengthen financial-sector safeguards and banking-sector restructuring, including the financial-sector safeguards, bank resolution and reform of state-owned banks.

It will also seek to enhance the financial capacity of the Deposit Insurance Trust Fund (DITF) and improve the effectiveness of bank resolution and restructuring.

The BB official has said outdated ICT infrastructure and a lack of integrated information management have made it difficult for regulators to respond effectively to emerging risks, including cyberattack and trans-border financial risks.

"These challenges have collectively threatened depositor confidence and financial and economic stability," he added.

The project is being taken as a continuation of the first phase of the Financial Sector Support Project (FSSP), implemented by Bangladesh Bank.

In the next phase of the FSSP-II, the strengthening of the financial-sector safeguards through Performance-Based Conditions (PBCs) and facilitating banking-sector-reform activities will be continued.

"Increasing the financial capacity of the DITF for deposit-insurance operations, ensuring effective implementation of bank resolution and restructuring, including reducing payment periods, and improving governance and financial stability of state-owned banks will be our major reform areas," the central banker said.​

 

[Saif]

FDI hopes through digital banking

Bangladesh Bank (BB)'s approval of a digital bank licence for a joint venture between international digital operator VEON Ltd. and Bangladesh's Square Group has added a new dimension to the country's search for foreign investment. VEON, the parent company of Banglalink, has committed an initial USD

thefinancialexpress.com.bd

FDI hopes through digital banking

Bangladesh Bank (BB)'s approval of a digital bank licence for a joint venture between international digital operator VEON Ltd. and Bangladesh's Square Group has added a new dimension to the country's search for foreign investment. VEON, the parent company of Banglalink, has committed an initial USD250 million as anchor investment under its "Invest in Bangladesh NOW!" initiative, while the broader programme aims to help mobilise USD1 billion in foreign direct investment across connectivity, digital infrastructure, digital financial services and artificial intelligence. The scale of the commitment makes the development significant.

The timing is also important. Bangladesh's net FDI inflow recovered to around USD1.77 billion in 2025, but fresh equity investment was only about USD555 million. In fact, much of the rise came from reinvested earnings and intra-company loans by businesses already operating here. So, a new commitment of USD250 million, if translated into actual projects and local infrastructure, would represent a substantial addition to recent fresh foreign capital. It could also help indicate whether international technology companies see Bangladesh as a market where they can build, not merely sell.

There is also the issue of financial inclusion. World Bank Global Fintex Database shows that only around 43 per cent of Bangladeshi adults had an account with a financial institution or a mobile money service provider in 2024. Mobile financial services have already familiarised millions with digital transactions. But a full-fledged digital bank can potentially go further by offering savings, small loans, payment products and other formal financial services without requiring customers to visit a conventional branch.

VEON reportedly has its digital financial platforms across Pakistan, Kazakhstan and Uzbekistan. The potential foreign investor's local partner too has a substantial business network. The proposed combination, therefore, is of international technological experience and local commercial reach. Whether that combination can actually reach small businesses, rural users and people now outside conventional banking will be one of the important tests of the venture.

The BB approval also raises a broader policy question. Bangladesh Bank recently approved several proposed digital banks, including ventures backed by foreign and local groups. The issue now is whether a transparent and predictable licensing environment can continue to attract other credible international digital operators with novel ideas. Investors willing to build data centres, cloud infrastructure, cybersecurity systems, payment platforms and other local digital facilities would bring a different kind of value from those interested only in selling imported digital services to Bangladeshi consumers.

For, foreign investment is not only about the amount of dollars entering the country. Technology transfer, managerial knowhow and skill formation matter equally. A growing digital banking and financial technology ecosystem would require software engineers, cybersecurity specialists, data analysts, compliance professionals, customer-service workers and other skilled personnel. That can expand employment opportunities while exposing local professionals to advanced systems and operating practices. Over time, such experience may also strengthen Bangladesh's own digital service companies.

However, the enthusiasm surrounding foreign technology investment has to be matched by equal attention to data security. In digital banking, data are at the heart of the business. Bangladesh Bank's digital-bank guidelines require cloud services used by such banks to remain within Bangladesh, prescribe cybersecurity and privacy safeguards and require periodic external ICT audits. They also restrict the use of customer information beyond designated business purposes. These are not minor technical conditions. They concern control over sensitive financial information.

That would also require coordination between Bangladesh Bank, telecom regulators, investment authorities and cyber security agencies, because digital finance sits at the intersection of banking, telecommunications, identity verification and data governance rather than within a regulatory silo.

The concern becomes wider as digital operators increasingly interact with payment systems, identification tools, public services and institutional databases. Sensitive government, institutional and citizens' data cannot be treated as another commercial asset. The test test would be whether Bangladesh can use such investments to deepen financial inclusion and digital capacity without compromising data security. If foreign capital helps build local infrastructure, create skilled jobs and strengthen domestic technological capacity while data remain protected under enforceable rules, then the VEON-Square project could provide a useful model for assessing future digital investment proposals.​