Dhaka:The Bangladesh Bank has outlined a comprehensive strategy to reduce non-performing loans (NPLs) and strengthen governance in the banking sector. This strategy includes short-, medium-, and long-term measures aimed at enhancing credit discipline and improving overall financial governance.
According to Bangladesh Sangbad Sangstha, the central bank presented its plans at the fourth meeting of the Parliamentary Standing Committee on the Ministry of Finance. The committee emphasized the importance of transparency, accountability, and economic stability in financial institutions.
In the short term, Bangladesh Bank will engage with senior management of banks with high classified loan ratios, conducting quarterly discussions to identify and address obstacles to loan recovery. The central bank will also review the recovery progress of the top 20 defaulted borrowers and update guidelines on NPL resolution strategy and credit risk management.
Medium-term plans involve formulating policies to incentivize officials involved in loan recovery and updating policies to reward good borrowers. These measures aim to foster a sound credit culture.
Long-term strategies focus on improving the overall credit management framework, addressing structural weaknesses, and enhancing loan sanctioning and monitoring processes. These reforms are critical as defaulted loans reached Tk 5,81,237.56 crore by June 30, 2026, marking a significant increase from the previous quarter.
The central bank is also progressing with legislative amendments, including the Bank Companies (Amendment) Act, 2026, and the Artha Rin Adalat (Amendment) Act, 2026, to strengthen banking governance and loan recovery. Additionally, efforts are underway to develop the Distressed Asset Management Act, 2026, and modernize the insolvency framework with the proposed Insolvency and Bankruptcy Act, 2026, with support from the International Finance Corporation.