IV Macro Policy & Sovereign DebtSouth Asia
Daily Star says wilful defaults are blunting Bangladesh's monetary easing
- Institution
- The Daily Star (editorial)
- Author
- Institutional publication
- Country · language
- Bangladesh · English
- Affiliation
- Independent newspaper
Summary
According to the Daily Star's editorial of 30 October, non-performing loans exceeded 6 lakh crore taka as of June 2026, roughly a third of all loans disbursed. Bangladesh Bank data put the figure at 6,06,555 crore taka, or 32.78%. Experts say more than 80% of the portfolio sits with wilful defaulters. The paper links most of them to a handful of politically connected groups that exploited lax rules under the Awami League.
The editorial argues that relaxing rules or cutting rates will not by itself revive private investment. Private investment fell to an 11-year low at the end of 2024-25, and private credit growth has been below 5% for six months. Bankers say demand for large letters of credit for machinery and factories is weak. The paper calls for a transparent portfolio review, targeted sanctions on wilful defaulters and separate treatment for those who failed because of the energy crisis.
Blind spot
The editorial does not name the source of the 80% figure or define how wilful default would be identified. It does not quantify bank capital shortfalls, IMF programme conditions or how much of the money moved abroad could be recovered. Nor does it separately measure how far the energy crisis has constrained investment.
Talay assessment
Bottom line
The Daily Star's reading is that Bangladesh's constraint is balance sheets and trust, not interest rates. Read together, a 32.78% bad-loan ratio and private credit growth below 5% suggest weak monetary transmission. The most likely path is a slow clean-up of bad loans, with private investment staying subdued for an extended period.
Likely effects
- BankingNegative1–6 months
With roughly a third of loans non-performing, capacity for new lending and bank capital are both constrained.
- Private investmentNegative1–6 months
Weak demand for large letters of credit signals that machinery and factory investment will lag even if rates are cut.
Possibilities, ranked
- 1Slow clean-up60%
The portfolio review makes partial progress, a few large groups are targeted and credit growth stays weak.
Watch: Bangladesh Bank's end-September bad-loan data and private credit growth
- 2Political will speeds it up25%
The government accelerates lawsuits and asset recovery against large defaulters.
Watch: Publication of wilful-defaulter lists and court rulings for large groups
- 3Easing breeds new distortion15%
Restructuring concessions mask bad loans and the ratio falls on paper.
Watch: A jump in restructured loans alongside a sudden fall in the bad-loan ratio
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Original publication: thedailystar.net · 30 October 2026
This page summarises the institution's view and does not reflect the view of Talay Insight. No direct quotation is used.