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When 75% Of A Bank Goes Bad

• By  Textile Excellence
• January 03, 2026

National Bank, Bangladesh, has curtailed large lending and is focusing on trade finance, remittances, cards and small and medium-sized loans as it works to stabilise operations.

Nearly three-quarters of National Bank’s loan portfolio has now turned non-performing, exposing the depth of the crisis at one of Bangladesh’s oldest private lenders. According to Bangladesh Bank data, defaulted loans at National Bank stood at Tk 32,039 crore as of September, accounting for 75.46% of its total lending.

Senior bank officials said the sharp jump does not reflect a sudden deterioration in credit quality but the delayed recognition of bad loans that were previously shielded by court stay orders. Around Tk 9,000 crore in loans had remained unclassified for years due to legal protection, much of it linked to influential and politically connected borrowers under the previous government. Once the stay orders were vacated in recent months, the loans were formally classified as defaults, revealing the true extent of the problem.

Repayments weakened further after the political transition in August last year, with several large borrowers stopping payments altogether. The exposure of these long-hidden bad debts has intensified National Bank’s financial stress. The lender has been loss-making since 2022 and continues to struggle to stabilise its balance sheet.

During January–September this year, National Bank posted a net loss of Tk 1,458 crore, compared with Tk 1,360 crore in the same period last year. High non-performing loans have also created a provision shortfall of Tk 24,282 crore, leaving the bank underprepared to absorb potential credit losses.

Liquidity pressures have worsened. By the end of September, total loans and advances stood at Tk 42,461 crore, against deposits of Tk 34,091 crore, indicating aggressive lending relative to its deposit base. Depositors have responded cautiously, with net withdrawals of Tk 2,907 crore during the first nine months of the year, despite continued inflows from new accounts.

To contain the stress, Bangladesh Bank has provided Tk 8,500 crore in liquidity support since the formation of the interim government. However, the bank continues to face difficulties in smoothly repaying older deposits. Management said new depositors are able to withdraw funds fully, while repayments to long-standing depositors are being staggered.

National Bank’s decline accelerated during the period it was controlled by the Sikder family, marked by loan irregularities, weak governance and fraud allegations. After multiple board changes, a new seven-member board was reconstituted by the central bank, with businessman Abdul Awal Mintoo now serving as chairman.

Managing Director Adil Chowdhury, appointed in July, said recovery efforts are underway. The bank has rescheduled Tk 3,500 crore in bad loans, with another Tk 10,000 crore in process, and has recovered over Tk 700 crore in cash. The bank aims to recover around Tk 14,000 crore by December and reduce its NPL ratio to 30–40%, though analysts caution that a turnaround will take time given the scale of legacy stress.

For now, National Bank has curtailed large lending and is focusing on trade finance, remittances, cards and small and medium-sized loans as it works to stabilise operations.

Repayments weakened further after the political transition in August last year, with several large borrowers stopping payments altogether. The exposure of these long-hidden bad debts has intensified National Bank’s financial stress. The lender has been loss-making since 2022 and continues to struggle to stabilise its balance sheet.