Alongside the economic slowdown, the country’s private sector is facing an unprecedented credit crunch. Many private banks are now struggling even to return depositors’ money, let alone disburse new loans. In this situation, state-owned banks had long been the main source of loans for entrepreneurs. But their financial health has also deteriorated sharply.
According to central bank data, as of December 2024, the total outstanding loans disbursed by the four major state-owned banks—Sonali, Janata, Agrani, and Rupali—stood at over BDT 3.12 trillion. Over the past six months, instead of increasing, the amount dropped by BDT 83.78 billion. By the end of June 2025, the outstanding loans of these four banks had fallen to BDT 3.04 trillion.
It is not just the disbursement figures that paint a grim picture. Over the same six-month period, all other key financial indicators of these state-owned banks also worsened. By the end of June, their total defaulted loans had risen to BDT 1.46 trillion, accounting for 48.10 percent of all disbursed loans. Moreover, the banks have failed to maintain adequate provisions against these bad loans. Except for Sonali Bank, the other three banks faced a combined provision shortfall of BDT 680.36 billion. During this period, Janata Bank alone incurred a net loss of BDT 20.72 billion.
More troubling than these financial indicators has been the deterioration in administrative discipline within the four state-owned banks. Following the student–led mass uprising, the boards and managements of these banks were reshuffled. New Managing Directors (MDs) were appointed with higher salaries and benefits. But lacking experience and skills, they failed to establish effective authority over bank staff. Instead, under pressure from employees, nearly 8,000 people were granted “supernumerary” promotions (promotions without positions), breaking the banks’ organograms and staffing structures. Such mass promotions were unprecedented in the history of state-owned banks.
As a result of these forced promotions, the banks remain in disarray. At Sonali Bank, the MD was repeatedly besieged by employees demanding eight incentive bonuses, though the finance ministry’s rules permit no more than three in any state-owned bank. Similar protests demanding extra bonuses are ongoing in the other state-owned banks as well.
Bonik Barta spoke with several dozen officials across various levels of the four state-owned banks. Most said that none of these banks currently operate in an orderly manner. Senior executives have been unable to establish effective authority over staff. In some cases, Deputy Managing Directors (DMDs) hold more influence than the Managing Directors (MDs). Over the past two decades, these banks have seen the looting of billions of taka through irregularities and corruption. Many officials who facilitated such embezzlement were later promoted after the 2024 mass uprising and given more important responsibilities. Bribes were also exchanged in some cases. To date, no employee of any state-owned bank has been dismissed or faced trial as an accomplice in these embezzlements. Gradually, the current top leadership of the banks is also becoming implicated in various irregularities and corruption.
Even the Chairmen and MDs themselves are concerned about the prevailing conditions. Speaking on condition of anonymity, a Chairman of one bank told Bonik Barta, “After August 5, the MDs of the state-owned banks were removed without any discussion. Some of the previous MDs were more qualified than the current ones. Many of the new MDs lack the competence and firmness required to run a large bank.”
Among the state-owned banks, the largest is Sonali Bank. As of June 30, 2025, the bank’s total deposits stood at over BDT 1.69 trillion, excluding interbank deposits. Despite such a large deposit base, its outstanding loans by June amounted to only BDT 897.78 billion, excluding staff loans. In December 2024, the loan portfolio was BDT 991.97 billion. This means Sonali Bank’s outstanding loans fell by BDT 94.19 billion rather than increasing. The bank’s advance-to-deposit ratio (LDR) now stands at just 57 percent.
In the first half (January–June) of 2025, Sonali Bank earned an operating profit of BDT 37.54 billion. However, most of this profit came from the government treasury. Through investments in high-interest treasury bills and bonds, the bank earned BDT 44.29 billion over six months, while its income from interest on loans was only BDT 5.75 billion. Among state-owned banks, Sonali’s default rate is relatively lower. By the end of June, its nonperforming loans totaled BDT 198.17 billion, accounting for 20.13 percent of its disbursed loans.
Following the 2024 mass uprising, former Finance Secretary Mohammad Muslim Chowdhury was appointed Chairman of Sonali Bank. Asked about the current condition of the bank, he told Bonik Barta, “As Chairman, I have tried to fulfill my responsibilities. The board’s role is to guide policy formulation. The management is responsible for implementing adopted policies. We have, however, tried to improve things.”
Mohammad Muslim Chowdhury noted that no reform initiatives have been undertaken in the state-owned banks. He said, “As public limited companies, these state-owned banks had the opportunity to be listed on the capital market. But that initiative was never taken. Asset quality reviews (AQRs) could have been conducted to uncover organized irregularities and corruption in these banks and to assess the true value of their loans. So far, we have not seen any such efforts. There is virtually no new investment in the country’s private sector. Given the current economic and political situation, entrepreneurs are reluctant to invest. If they don’t want to, where are we supposed to lend?”
However, Sonali Bank Managing Director Mohammad Shawkat Ali Khan told Bonik Barta, “Looking only at the loan portfolio, it may seem like we are not lending. But in reality, even if we are not issuing large loans, we have disbursed significant loans in the SME sector. Under the current circumstances, more loans are needed in the SME sector. Other financial indicators of the bank are also improving.”
Over the past two decades, Janata Bank has suffered the most from embezzlement among state-owned banks. Large groups, including Beximco, S Alam, Bashundhara, AnonTex, and Crescent, took more than BDT 600 billion in loans from the bank. These loans are now classified as nonperforming (NPL). As of the end of June 2025, Janata Bank’s nonperforming loans totaled BDT 721.07 billion, accounting for 75.91 percent of its disbursed loans. Its provisioning shortfall reached BDT 458.96 billion. During the first half of 2025, the bank posted a loss of BDT 20.72 billion. Facing a cash crunch, Janata Bank is now accepting term deposits at 11–13 percent interest. According to officials, these high-interest deposits could push the bank toward further long-term distress.
Like other state-owned banks, Janata Bank is also facing internal disorder among its employees. Officials are divided under the banners of various boards and organizations. Even during Sheikh Hasina’s 15-year authoritarian rule, organizations including the CBA were influential. Leaders of these groups often facilitated irregularities and embezzlement instead of working for the bank’s welfare, enriching themselves in the process. Officials said the same patterns persist at Janata Bank today.
Md Mojibur Rahman, Managing Director of Janata Bank, also acknowledged the poor situation. Speaking to Bonik Barta, he said, “When I took responsibility, I inherited a distressed bank. I am trying to revive it. Despite the negative image, deposits have increased by BDT 16 billion. There were significant outstanding LC liabilities, which have now been reconciled. According to regulations, no officer should remain in the same branch or department for more than three years. However, at Janata Bank, many officers had been in the same position for seven to eight years. We have transferred those officers. But due to the financial situation, loan distribution is not possible.”
Like Janata, state-owned Agrani Bank is also in poor financial shape. In the first six months of 2025, the bank’s loan portfolio has remained at BDT 720 billion. Of this, BDT 322.57 billion has turned nonperforming, nearly 41 percent of the distributed loans. Agrani Bank’s provision shortfall has reached BDT 113.79 billion.
After the Interim Government took office, Syed Abu Naser Bukhtear Ahmed was appointed Chairman of Agrani Bank. He previously served as Managing Director of the bank from 2004 to March 2010. Regarding the bank’s current situation, he told Bonik Barta, “The crisis at Agrani Bank is beyond imagination. After 2010, the bank was completely ruined. When I assumed the chairmanship, I found that nearly BDT 25 billion had been debited from the bank’s NOSTRO accounts (accounts opened for foreign currency transactions), but the corresponding amount was not debited from customer accounts. This amount remained overdue for 735 days. In my long banking career, I have never heard of such massive fraud.”
The Chairman added, “In the past two decades, only people affiliated with the Awami League received loans from Agrani Bank. Many loans were distributed under the guise of forgery and fraud. Now those loans are not being repaid. Currently, the bank’s nonperforming loan ratio is nearly 40 percent. Yet when I ended my tenure as top executive in 2010, the bank’s nonperforming loans were only BDT 21.02 billion, less than 10 percent. Such a good bank was completely ruined afterward. Since taking charge as Chairman, I have been trying to reduce nonperforming loans through cash recovery, rescheduling, and other legally approved processes.”
State-owned Rupali Bank is also in a downward trajectory across all financial indicators. Over the first six months of 2025, the bank’s loan portfolio decreased by BDT 10 billion, rather than growing. By the end of June, the bank’s total loans stood at BDT 465.21 billion, of which BDT 221.79 billion had turned nonperforming. As the only state-owned bank listed on the stock market, Rupali Bank’s nonperforming loan ratio has now reached 44 percent. Its provision shortfall stands at BDT 107.61 billion.
Rupali Bank Managing Director Kazi Md Wahidul Islam said, “They are issuing loans to good clients. That is why loan growth is somewhat limited. The country’s economic situation also has an impact.”
Although Wahidul Islam cites lending to good clients, multiple allegations have circulated against him within the bank. More than a dozen Rupali Bank officials told Bonik Barta, “Currently, there is no scope to issue large loans. That is why loans of BDT 30–50 million are being distributed in the SME and agriculture sectors. Most of these loan proposals are pushed from the MD’s office, not from the branch. At the same time, there are irregularities in promotions and transfers. Since the post-uprising period, most promotions in the bank have been controversial. Officers lacking merit or skill have been promoted, while qualified individuals have been overlooked. Under pressure, nearly 1,500 officers were promoted as supernumerary, without positions.”
Regarding these issues, Kazi Md Wahidul Islam told Bonik Barta, “Large clients come to me for loans. But I tell them they must first submit a proposal through the branch. Only then do we provide loans. There is no opportunity for irregularities in the bank’s lending or promotions.”
To review the financial situation of state-owned banks, the Ministry of Finance has called a meeting on Wednesday (September 24). Chaired by Secretary of the Financial Institutions Division (FID) Nazma Mobarek, all top executives of the state-owned commercial banks have been asked to attend.