A recent report from White Paper on the State of Bangladesh’s Economy has revealed that 10 banks in Bangladesh, including two state-owned and eight private ones (a mix of Shariah-based and conventional private commercial banks), are on the brink of bankruptcy. These banks control 33% of the total loans and 32% of the deposits in the country’s banking sector.
The actual value of their assets is only 52% of what they report, resulting in negative net worth. Eight of these banks are facing severe liquidity problems, making it impossible for them to meet depositor demands. The situation has been worsened by poor management and risky investments in non-performing, bankrupt, or non-existent companies.
All 10 banks have been rated as “highly fragile” and have been previously identified as weak by regulatory bodies. They are now depending heavily on Bangladesh Bank’s guarantee schemes to survive, as they can no longer secure support from the market. These banks have failed to meet their financial obligations, posing a serious risk to the entire banking sector.
Experts warn that if the situation is not addressed urgently, it could lead to broader instability in the financial system, threatening the country’s economy. Immediate reforms are necessary to protect the financial sector and restore confidence in the banking system.
Source: The Business Standard
