Nine new-generation banks licensed in Bangladesh since 2013 continue to grapple with high levels of non-performing loans (NPLs), raising concerns about the quality of banking sector governance and the impact of political considerations on licensing decisions. Data from Bangladesh Bank and recent financial statements reveal that several of these lenders are under significant financial stress, with some exhibiting alarmingly elevated bad loan ratios.
Among the nine banks licensed under the previous Awami League government—Padma Bank, NRB Commercial Bank, NRB Bank, Global Islami Bank, Union Bank, Modhumoti Bank, Midland Bank, Meghna Bank, and South Bangla Agriculture & Commerce (SBAC) Bank—three have particularly severe NPL issues. Padma Bank’s bad loans reached approximately 89 percent of its total loan book by June 2026. Meanwhile, Union Bank and Global Islami Bank were combined into Sammilito Islami Bank after incurring substantial losses; Union Bank's non-performing loans surged to 97 percent of its total lending by mid-2026, following a dramatic shift from a reported profit of Tk 160 crore in 2023 to a loss of Tk 25,790 crore in 2024.
Several others also face challenges. NRB Commercial Bank and SBAC Bank hold double-digit NPL ratios standing at around 21 percent and 16 percent, respectively. NRB Commercial Bank reported bad loans increasing to Tk 3,218.78 crore as of June 2026, while SBAC Bank’s NPLs rose to Tk 1,557.27 crore in the same period, with profits for both banks declining sharply in recent years. Specifically, SBAC Bank’s profit dropped from Tk 54 crore in 2023 to just Tk 70 lakh in 2025. Both institutions are employing measures such as loan restructuring and enhanced policy support to address the growing volume of non-performing assets.
Other banks from this group—NRB Bank, Modhumoti Bank, and Meghna Bank—have single-digit NPL ratios that nonetheless exceed the generally accepted safe thresholds but are reportedly showing signs of improvement. Midland Bank stands out as an exception, maintaining a relatively stable asset quality with bad loans slightly above 5 percent as of June 2026 and remaining profitable.
A subsequent round of banking licenses issued in 2018-2019 brought in institutions such as Community Bank and Citizens Bank, which generally display stronger asset quality, although some are contending with rising bad loans and declining profitability.
Economists and financial experts attribute the banking sector’s challenges in part to political influence in the licensing and governance processes. They argue that many licenses were granted based on political considerations rather than rigorous financial assessment, which has undermined sector stability and contributed to the accumulation of bad debts. The consensus among analysts calls for reforms to ensure that future bank approvals and senior management appointments are determined based on transparent financial criteria and merit, thereby promoting healthier banking sector conditions in Bangladesh.