Bangladesh’s non-performing loan rate highest in world
Bangladesh now has nearly Tk 33 of every Tk 100 in bank loans classified as non-performing, making it the world’s highest in terms of the non-performing loan rate. The South Asian nation is followed by Chad, Equatorial Guinea, Algeria and Ghana.
Earlier, the war-torn Ukraine had the highest non-performing loan rate in the world. The country subsequently brought the rate down rapidly by writing off old non-performing loans, recovering loans and increasing the volume of good-quality new loans.
In Bangladesh, meanwhile, irregular and anonymous loans previously kept hidden were classified as non-performing, revealing the true picture and pushing Bangladesh ahead of Ukraine.
1. Bangladesh: Non-performing loans 32.92pc
According to Bangladesh Bank, non-performing loans in the country's banking sector rose to Tk 6.07 trillion (606,555 crore) at the end of June 2026, which was 32.78 per cent of the total loans disbursed by banks.
At the end of March 2026, the amount of non-performing loans stood at Tk 5.89 trillion (588,704 crore). It increased by Tk 178.51 billion (17,851 crore) in just three months. Earlier, in September 2025, non-performing loans had reached a record Tk 6.45 trillion (644,515 crore).
Experts say a large portion of these non-performing loans did not emerge suddenly. During the previous Awami League government, many troubled loans had been shown as regular for years through repeated rescheduling, special concessions and accounting changes.
Following the political changeover, reviews of banks' asset quality and audits by domestic and foreign institutions have revealed the true extent of irregularities, fraud and anonymous loans. As a result, a huge volume of loans that had previously remained hidden has now turned into non-performing loans.
The five merged banks are in the worst condition. More than 80 per cent of the loans disbursed by these banks are non-performing. Apart from these, more than half of the loans of several other state-owned and private banks have also become non-performing. Fake and anonymous loans issued under political influence, weak oversight, a business downturn and the energy crisis have also contributed to the rise in non-performing loans.
2. Chad: Non-performing loans 31.51pc
The latest available non-performing loan rate in Chad, a Central African country, is 31.51 per cent. A comparison of the latest available data for each country in the International Monetary Fund's (IMF) Financial Soundness Indicators database shows that this is the second-highest rate after Bangladesh. However, the data for Chad is from December 2023. The country has not provided any newer data for this indicator to the IMF since then.
3. Equatorial Guinea: Non-performing loans 30pc
Equatorial Guinea, another Central African country, ranks third on the list. According to data from the African Development Bank, the non-performing loan rate in the country's banking sector is now 30 per cent. The rate was 32.5 per cent in 2023.
4. Algeria: Non-performing loan rate 20.05pc
In Algeria, a North African country, the non-performing loan rate stood at 20.05 per cent at the end of December 2025. A comparison of the latest available data for countries published by the IMF shows that this is the fourth-highest rate.
5. Ghana: Non-performing loan rate 18.11pc
Ghana, a West African country, ranks fifth on the list. The non-performing loan rate in the country's banking sector was 18.11 per cent in the first quarter of 2026. Ghana's non-performing loan rate was 20.6 per cent in 2023.
Ukraine was previously at the top
Ukraine had remained at the top of the non-performing loan list for a long time. The country's non-performing loan rate was 37.4 per cent in 2023. Following Russia's invasion, it rose to nearly 39 per cent amid the economic shock.
However, Ukraine's loan situation began to improve from 2024. The ratio of non-performing loans to total loans declined as loan recovery, restructuring and the disbursement of relatively better-quality new loans increased.
According to Ukraine's central bank, total loans in the country's banking sector increased by 133.7 billion hryvnias, or 10.3 per cent, in the first six months of 2025.
During the same period, the non-performing loan rate fell to 27 per cent. It should be noted that US$1 is equivalent to 44.61 hryvnias.
The major change came in December 2025. Several state-owned banks, including PrivatBank, Ukraine's largest bank, wrote off a large amount of old non-performing loans from their accounts.
As a result, although the non-performing loan rate across Ukraine's entire banking sector stood at 23.91 per cent on 1 December 2025, it fell to 13.92 per cent on 1 January 2026.
However, writing off these loans does not mean that the loans were forgiven. The loans had already been fully provisioned for. After the write-off, they were removed from the banks' main balance sheets and transferred to off-balance-sheet accounts.
The banks retain the right to recover the amounts owed by the borrowers concerned. PrivatBank has been pursuing legal action to recover these funds in Ukraine as well as in London, Cyprus and Israel.
Even after that, the downward trend in non-performing loans in Ukraine has continued. According to data from Ukraine's central bank, the non-performing loan rate in the country's banking sector fell further to 12.5 per cent on 1 July 2026. This is the lowest level in nearly 17 years. As a result, the country is now well outside the list of the five countries with the highest non-performing loan rates.
How Bangladesh rose to the top
The trajectories of Ukraine and Bangladesh have been almost the opposite. Ukraine wrote off old non-performing loans that had been fully provisioned for from its balance sheet, recovered and restructured loans, and increased the volume of good-quality new loans. As a result, both the amount and ratio of non-performing loans declined.
The opposite has happened in Bangladesh. In June 2024, officially reported non-performing loans in the country's banking sector stood at Tk 2.11 trillion (211,391 crore). Within two years, the amount has surpassed Tk 6 trillion (600,000 crore). However, this does not mean that all the non-performing loans were newly created during this period. Rather, a huge volume of troubled loans that had been kept hidden for years through rescheduling, special concessions and accounting tactics is now being recognised as non-performing.
What steps Bangladesh is taking to reduce non-performing loans
To reduce non-performing loans, Bangladesh Bank has brought the rules for loan classification and provisioning in line with international standards. The asset quality of weak banks is being reviewed, and the boards of directors of several banks have been reconstituted.
Risk-based supervision has also been introduced. As a result of these measures, many troubled loans that were previously shown as regular are now being identified as non-performing.
At the same time, various concessions are being provided to loan defaulters to help overcome the situation. Although writing off or rescheduling loans may reduce the amount of non-performing loans on paper, it does not recover the money owed. The IMF has also said that stricter classification policies and asset quality reviews could bring more non-performing loans to light.
Experts say that to achieve results, the authorities must seize the assets of wilful loan defaulters and recover the money, expedite the resolution of cases, end political influence over bank management and loan approvals, and prevent the creation of new bad loans. If these measures are implemented consistently, non-performing loans could decline in the medium term. However, if indiscriminate rescheduling and special concessions are provided again, the rate may fall temporarily, but the underlying problems in the banking sector will not be resolved.
Source: Prothom Alo