Bangladesh is facing one of the worst financial crises in its history, with the country’s banking and non-banking financial sectors teetering on the edge of collapse. According to recent assessments by the Asian Development Bank (ADB) and Bangladesh Bank, the nation now holds the highest volume of defaulted loans in Asia, triggering widespread panic across markets, institutions, and households.
The crisis has been brewing for years, but 2025 has exposed its full scale. A vicious cycle of loan defaults, weak regulation, political interference, and systemic corruption has left the economy in a precarious state. The government’s recent proposal to remove the definition of “wilful defaulter” from the Banking Company Act has further intensified concerns about accountability and transparency in the financial system.
Bangladesh Financial Crisis – Key Indicators (2025)
| Indicator | Value / Status | Commentary |
|---|---|---|
| Total Defaulted Loans (Banks) | Tk6 lakh crore | Highest in Asia |
| Hidden Defaults (Pending Disclosure) | Tk3.18 lakh crore | Under review |
| Default Rate (2024) | 20.2% of total disbursed loans | Up 28% YoY |
| NBFI Defaulted Loans | Tk21,462 crore | 83% of loan portfolio |
| GDP Growth Estimate (2025) | 2.3% | Down from 6.1% in 2023 |
| Stock Market Decline (16 years) | -38% | Adjusted for inflation |
The banking sector is at the heart of the crisis. Commercial banks are burdened with defaulted loans amounting to Tk6 lakh crore, while hidden defaults worth another Tk3.18 lakh crore are in the process of being disclosed. Recovery efforts have stalled, with only Tk219 crore recovered from the top 20 defaulters who owe over Tk31,908 crore.
In a desperate bid to contain the fallout, Bangladesh Bank has announced the merger of five Islamic banks—First Security, Social Islami, Global Islami, Union, and Exim Bank—into a new state-owned entity tentatively named United Islami Bank. The government plans to inject Tk20,000 crore in capital to stabilize the new entity. Alarmingly, default rates in these banks range from 48% to 98%.
Islamic Bank Merger – Snapshot
| Bank Name | Default Rate (%) | Status Before Merger | Capital Infusion (Planned) |
|---|---|---|---|
| First Security Islami | 98% | Near collapse | Tk4,000 crore |
| Social Islami Bank | 72% | High-risk | Tk4,000 crore |
| Global Islami Bank | 65% | Under stress | Tk4,000 crore |
| Union Bank | 58% | Weak fundamentals | Tk4,000 crore |
| Exim Bank | 48% | Moderate risk | Tk4,000 crore |
The situation is even more dire in the non-banking financial institutions (NBFIs). According to Bangladesh Bank, 20 troubled NBFIs have defaulted loans totaling Tk21,462 crore, representing 83% of their loan portfolios. Nine of these institutions are recommended for liquidation. Many are unable to repay depositors, eroding public trust and threatening a systemic collapse.
Experts warn that unless swift action is taken to protect depositors and enforce accountability, the entire financial ecosystem could unravel. Former World Bank chief economist Dr. Zahid Hussain stated, “Without bold reforms like those undertaken in India, this crisis will not end”.
NBFI Sector Breakdown – 2025
| Institution Type | Number of Entities | Defaulted Loan Share (%) | Recommended Action |
|---|---|---|---|
| Troubled NBFIs | 20 | 83% | Liquidation for 9 |
| Stable NBFIs | 12 | <20% | Monitoring and restructuring |
| Total NBFI Exposure | Tk25,800 crore | — | Sector-wide audit underway |
The stock market has also been under prolonged stress. Over the past 16 years, it has shrunk by 38%, with inflation-adjusted capital erosion averaging 3% annually. According to the Dhaka Stock Exchange (DSE), shares of 98 out of 397 listed companies are now trading below the face value of Tk10. More than half of these are priced under Tk5, indicating a dominance of junk stocks and speculative trading.
Saiful Islam, president of the DSE Brokers Association of Bangladesh, said, “So many junk stocks have flooded the market that genuine investors are fleeing. The market needs a complete overhaul.”
Dhaka Stock Exchange – Market Health Snapshot
| Metric | Value / Status | Commentary |
|---|---|---|
| Listed Companies | 397 | Includes banks, NBFIs, corporates |
| Trading Below Face Value | 98 companies | Tk10 face value benchmark |
| Junk Stocks (<Tk5) | 52 companies | High speculative risk |
| Market Shrinkage (16 years) | -38% | Inflation-adjusted |
| Investor Capital Erosion | Avg. 3% annually | Long-term decline |
The political backdrop has further complicated the crisis. The interim government that replaced Sheikh Hasina in 2024 has struggled to stabilize the economy. With national elections due next year, uncertainty looms over policy continuity and reform implementation.
Selim Raihan, executive director of the South Asian Network on Economic Modelling (SANEM), emphasized, “The problem will not be solved unless political interference is stopped and the judiciary is strengthened”.
Expert Reactions – Bangladesh Financial Crisis
| Name | Role/Title | Reaction Quote |
|---|---|---|
| Dr. Zahid Hussain | Former WB Economist | “Bold reforms are the only way out.” |
| Selim Raihan | SANEM Director | “Political interference must end.” |
| Saiful Islam | DSE Brokers President | “Junk stocks are killing investor confidence.” |
| ADB Report | Regional Assessment | “Bangladesh has Asia’s weakest banking system.” |
Social media platforms have seen a surge in discussions around the crisis, with hashtags like #BangladeshCrisis, #BankingCollapse, and #NBFIMeltdown trending across regional forums. Citizens are demanding transparency, accountability, and urgent reforms to protect savings and restore economic stability.
Public Sentiment – Bangladesh Financial Crisis
| Platform | Engagement Level | Sentiment (%) | Top Hashtags |
|---|---|---|---|
| Twitter/X | 1.2M mentions | 78% critical | #BangladeshCrisis #BankingCollapse |
| 980K interactions | 74% concerned | #NBFIMeltdown #EconomicEmergency | |
| YouTube | 860K views | 70% mixed | #BangladeshEconomy #ReformNow |
| 720K views | 76% analytical | #FinancialCrisis #PolicyReform |
As Bangladesh grapples with its deepest financial crisis in decades, the road to recovery will require bold decisions, institutional reforms, and a renewed commitment to transparency. Without immediate intervention, the crisis threatens to spiral into a full-blown economic emergency.
Disclaimer: This article is based on publicly available financial reports, expert commentary, and institutional assessments. It does not constitute investment or political advice. All quotes are attributed to public figures and institutions as per coverage. The content is intended for editorial and informational purposes only.
