New Delhi, July 10 (IANS) Bangladesh now ranks second globally for non‑performing loans, with nearly one‑third of bank lending classified as defaulted, a new report has said.

The report from Bangladesh-based The Business Standard said the country also has the highest NPL ratio among SAARC (South Asian Association for Regional Cooperation) nations largely due to weak credit discipline, politically influenced lending and poor loan recovery.

Ukraine tops the global list with an NPL ratio of 37.35 per cent, largely reflecting the economic destruction caused by the ongoing war. Bangladesh follows with an NPL ratio of 32.26 per cent, ahead of Chad (31.51 per cent) and Guinea (31.15 per cent).

Bangladesh Bank data showed that non‑performing loans (NPLs) climbed to Tk 5.89 lakh crore at end‑March, rising by Tk 31,000 crore in just 3 months.

Total outstanding loans in the country stood at Tk 18.25 lakh crore and when restructured loans and special mention accounts are included, stressed assets touch Tk 11.2 lakh crore, or roughly 61 per cent of the banking system’s loan book.

The report cited bankers who felt politically influenced lending decisions weakened credit standards, with many loans approved based on connections rather than borrowers’ repayment capacity.

The sector’s capital position has deteriorated sharply as aggregate Capital to Risk‑Weighted Assets Ratio (CRAR) fell to ‑2.64 per cent at 2025-end from 3.08 per cent a year earlier, well below the regulatory minimum of 12.5 per cent.

Pakistan’s banking sector maintained a CRAR of 20.8 per cent, followed by Sri Lanka at 19.4 per cent and India at 17.2 per cent.

Md Touhidul Alam Khan, managing director and CEO of NRBC Bank said that Bangladesh’s extreme divergence from regional peers showed that neighbouring economies insulated their banking sectors through strict macro prudential discipline, while Bangladesh repeatedly absorbed corporate and credit shocks.

A surge in defaulted loans force banks to maintain higher provisioning, increase litigation costs, in turn reducing its profitability and limiting their ability to extend fresh credit to productive sectors.

—IANS

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