Mohammad Muslim Chowdhury, a former finance secretary, resigned as chairman of Sonali Bank PLC on March 2, leaving the country’s largest state-owned lender without a permanent head for five and a half months. Former civil servant Muhammed Mahbubur Rahman has since led the board in an acting capacity.
The prolonged uncertainty, coupled with fears that the managing director could also be replaced, has made executives reluctant to take major decisions and constrained lending. Sonali’s loan book shrank by BDT 110 billion in the first six months of 2026.
Other state-owned lenders face similar uncertainty, as doubts over their boards and senior management have spread across the sector.
The Bangladesh Nationalist Party (BNP) formed the government on February 17 after winning the 13th parliamentary election. Six months into its term, the government has made little visible progress on reforming public banks or strengthening their governance. Speculation over changes at Sonali, Janata, Agrani, Rupali, Bangladesh Krishi Bank and other state-owned lenders has disrupted the chain of command.
Without assurances that incumbent chairmen and managing directors will serve out their terms, executives have little incentive to commit to decisions that could outlast their tenure. Banks have therefore largely confined themselves to routine business: taking deposits, processing and disbursing remittances, opening government letters of credit, buying treasury bills and bonds, and delivering various public services. Lending to the private sector and entrepreneurs has slowed sharply, leaving some public banks with shrinking loan books.
Chowdhury, who also served as comptroller and auditor general, described the failure to appoint a permanent chairman at Sonali as a major lapse.
“I left the chairmanship of Sonali Bank on March 2,” Chowdhury told Bonik Barta. “More than five and a half months have passed since then, yet the government still hasn’t appointed a chairman to the country’s largest bank. This is a major failure.”
“Irregularities, corruption and looting have already devastated the country’s banking sector. Half of the loans extended by state-owned banks have gone bad. In this situation, the banks can’t be saved with ‘paracetamol’ alone; they need ‘Coramine’,” he said.
The former chairman added: “The number of public and private banks must be halved. The elected government was expected to take tough steps to reform state-owned banks, but we have seen nothing over the past six months.”
Bangladesh has nine scheduled state-owned lenders: Sonali, Janata, Agrani, Rupali, BASIC and Bangladesh Development Bank (BDBL) are commercial banks, and Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank (RAKUB) and Probashi Kallyan Bank are specialised lenders. Ansar-VDP Unnayan Bank, Karmasangsthan Bank and Palli Sanchay Bank operate outside the scheduled banking system.
The state lenders entered the BNP government’s tenure badly weakened. During 15 uninterrupted years of Awami League rule, which ended with the party’s ouster in a mass uprising, repeated financial scandals, corruption and governance failures pushed several of the banks towards insolvency. Janata Bank and BASIC Bank remain in extremely precarious condition, while Agrani, Rupali, BKB, RAKUB and others are under severe strain. Sonali remains the strongest of the group.
Central bank data show the scale of the problem. Non-performing loans at the nine scheduled state-owned commercial and specialised banks reached BDT 1.68 trillion in March 2026, equal to 45.2 percent of their total outstanding credit.
The leadership churn began after the Awami League government fell on August 5, 2024. The subsequent interim government removed the chairmen and managing directors of all state-owned banks, then reconstituted their boards and appointed new executives. Some of those appointments immediately drew questions over the appointees’ qualifications and competence. The BNP government after taking office replaced economist Dr Ahsan H Mansur with Md Mostaqur Rahman as the governor of Bangladesh Bank, and later overhauled the deputy governor positions as well.
Those changes fuelled speculation that state-owned lenders would face another round of board and management changes.
After Sonali Bank’s chairman, Mohammad Muslim Chowdhury, resigned on March 2, the chairman of Bangladesh Krishi Bank followed. And as fears grew that managing directors could also be replaced, numerous deputy managing directors began lobbying government circles for senior posts.
Six months later, little has been resolved. Several state bank officials told Bonik Barta that speculation over new managing directors and board changes had continued without any concrete decision. The uncertainty has left current executives reluctant to make strategic choices, further slowing operations.
The banks’ financial indicators reflect that caution.
Rupali Bank’s half-yearly report for January to June shows its outstanding loans rose by only BDT 8.92 billion in the first six months of 2026, from BDT 513.14 billion on December 31 last year to BDT 522.06 billion in June. Its investment portfolio, however, rose from BDT 227.52 billion to BDT 241.85 billion, with the entire increase going into government treasury bills and bonds. Rupali reported an operating loss of BDT 6.11 billion for the first half of the year.
Sonali Bank’s loan book contracted more sharply. By June 2026, the largest state-owned lender held deposits of about BDT 2 trillion against outstanding loans of BDT 960 billion, taking its advance-to-deposit ratio below 50 percent. Its loan book stood at BDT 1.07 trillion at the end of December 2025, meaning its outstanding loans fell by about BDT 110 billion over the first six months.
Md Shawkat Ali Khan, Sonali Bank’s managing director, rejected the suggestion that the bank had stopped lending.
He told Bonik Barta: “Looking at the loan book, it might seem that Sonali Bank hasn’t disbursed any new loans. But the truth is we have disbursed about BDT 150 billion in fresh loans this year. Sonali Bank’s non-performing loan ratio is around 15 percent. Recoveries from both non-performing and regular loans have been good, so the outstanding loan stock hasn’t increased. The decline in the loan book is mainly due to adjustments to some government LTRs.”
Agrani Bank also recorded a contraction. Its outstanding loans fell from BDT 805.73 billion at the end of December 2025 to BDT 800.83 billion at the end of June 2026.
The bank’s chairman, Syed Abu Naser Bukhtear Ahmed, attributed the weak performance to the scale of the problems inherited from the previous Awami League government. Asked what reforms had taken shape in state-owned banks six months into the current elected government’s term, he said the damage built up over 15 years could not be undone quickly.
“It is very difficult to quickly erase the stain and damage left by one and a half decades of fascist rule,” Ahmed told Bonik Barta. “The holes through which money was drained from Agrani and other state-owned banks have been closed. In the 15 years after 2009, Agrani Bank alone disbursed more than BDT 500 billion in loans, more than half of which are now non-performing. We are trying to reduce non-performing loans through rescheduling and recovery. But recoveries remain very small compared with the effort and expectations.”
Asked about reforms at state-owned banks and new appointments to the chairman and managing director posts, Nazma Mobarek, secretary of the finance ministry’s Financial Institutions Division, told Bonik Barta: “We have largely put the reform programme for state-owned banks in order. The results will be visible soon.”
A senior finance ministry official offered a less optimistic assessment. Fifteen years of Awami League rule, the official told Bonik Barta, had distorted promotions through bribery and political patronage, preventing qualified officers from rising beyond deputy general manager. That has left the current pool of deputy managing directors without enough suitable candidates for managing director posts.
The official added that the situation has forced the government to consider recruiting senior executives from the private sector for managing director posts at state-owned banks. There is precedent for such appointments.