The recent disclosure that only ten banks account for 71 per cent of all defaulted loans in the country's banking sector is a stark indicator of a worsening financial crisis rooted in unethical lending practices, mismanagement, and systemic regulatory failure.
With total defaulted loans soaring to a record Tk 420,335 crore by March this year, and Tk 300,028 crore held by just these ten institutions, the scale of the problem demands urgent and decisive action.
This concentration of bad loans among a few banks, both state-owned and private, reveals chronic vulnerabilities that have festered over years.
Several of these banks have been embroiled in major loan scams involving large borrowers, often linked to political and business interests. The fact that the largest share of defaulted loans is held by state-owned banks reflects poorly on oversight and due diligence, and raises serious questions about the political interference and inefficiency that continue to plague public financial institutions.
Private banks have not fared better. Several have been found extending massive loans to a handful of business groups without adequate risk assessment or collateral. The result is a banking system burdened by non-performing assets, eroding public trust and undermining financial stability.
The crisis is not only a matter of poor internal governance but also of regulatory inaction. Despite multiple exposures of irregularities, there has been little accountability, either among bank management or the borrowers responsible for these defaults.
The lack of punitive measures or recovery mechanisms has emboldened repeat offenders, making loan default appear to be a low-risk, high-reward strategy.
While some banks report marginal improvements in recovery and deposit growth, these gains are far from sufficient to offset the damage caused by years of unchecked lending fraud. Selling off mortgaged properties and intensifying collection efforts are positive steps, but without systemic reform, they will amount to little more than cosmetic fixes.
The central bank must assert stronger regulatory authority, enforce stricter lending guidelines, and ensure transparency in credit assessments. Simultaneously, an independent mechanism for investigating and prosecuting financial fraud is essential.
Institutions must be held accountable not only for their lending decisions but also for their failure to act against defaulters.
Ultimately, restoring the health of the banking sector requires a shift from politically motivated and ethically compromised banking practices to a culture of accountability, transparency, and financial prudence.
If these reforms are not undertaken swiftly and sincerely, the risk is not just economic instability but a profound erosion of public confidence in the entire financial system.
