A shocking Bangladesh Bank report reveals loan scam. A capital looting of Tk 2.5 lakh crore over 15 years during the Awami League rule, implicating 20 banks in a systemic financial crisis for.
A fresh wave of panic has gripped Bangladesh’s financial sector following the revelation of a staggering Tk 2.5 lakh crore capital loot over the past 15 years. According to a recent Bangladesh Bank report, the looting took place under the Awami League government, involving 20 major banks, and disguised largely under the guise of loan scam. This alarming figure points to one of the worst financial scams in the country’s history.
The final quarter of 2024 saw a sharp surge in the capital deficit among banks. From Tk 53,253 crore in Q3 (July–September), the deficit skyrocketed to Tk 1,71,789 crore in Q4 (October–December), marking a three-month jump of Tk 1,18,534 crore. Although some banks recorded surplus capital, the net capital deficit in the banking sector stood at Tk 1,17,647 crore—up from Tk 39,655 crore a year earlier in December 2023.
This marks a 196% year-on-year increase, prompting widespread concern across the banking and financial services landscape.
20 Banks Drowning in Deficits of Loan Scam
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Janata Bank has a capital deficit of Tk 52,891 crore.
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Bangladesh Krishi Bank has a capital deficit of Tk 18,199 crore.
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Union Bank has a capital deficit of Tk 15,690 crore.
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First Security Islami Bank has a capital deficit of Tk 13,991 crore.
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Islami Bank Bangladesh has a capital deficit of Tk 12,885 crore.
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Social Islami Bank has a capital deficit of Tk 11,709 crore.
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IFIC Bank has a capital deficit of Tk 9,290 crore.
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National Bank has a capital deficit of Tk 7,799 crore.
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Rupali Bank has a capital deficit of Tk 5,192 crore.
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Padma Bank has a capital deficit of Tk 4,985 crore.
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Agrani Bank has a capital deficit of Tk 4,686 crore.
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Basic Bank has a capital deficit of Tk 3,156 crore.
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Global Islami Bank has a capital deficit of Tk 2,905 crore.
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Rajshahi Krishi Unnayan Bank has a capital deficit of Tk 2,470 crore.
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ICB Islamic Bank has a capital deficit of Tk 1,910 crore.
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Standard Bank has a capital deficit of Tk 1,862 crore.
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Bangladesh Commerce Bank has a capital deficit of Tk 1,656 crore.
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AB Bank has a capital deficit of Tk 5,180 crore.
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Al Arafah Islami Bank has a capital deficit of Tk 2,540 crore.
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Habib Bank (foreign) has a capital deficit of Tk 120 crore.
These deficits signal a systemic crisis that could soon impact everyday banking services, public confidence, and international trade operations.
Bangladesh Bank’s report also reveals a dangerous drop in the Capital to Risk-Weighted Assets Ratio (CRAR) to 3.08% in December 2024, down from 6.86% in September. This is significantly below the Basel III requirement of 10%, rendering many banks non-compliant with international banking norms.
What is CRAR?
CRAR is a crucial indicator of a bank’s financial strength. If a bank cannot maintain the required CRAR, it becomes ineligible to pay dividends, suffers a drop in creditworthiness and loses foreign partnerships.
Root Cause
Banking expert Mohammad Nurul Amin, former chairman of the Association of Bankers Bangladesh (ABB) and current chairman of Global Islami Bank, attributes the rising capital deficit to non-performing loans and unchecked favoritism.
“Provision deficit has increased due to high defaulted loans. Many banks couldn’t reserve enough from their profits. This was hidden for years due to political favoritism,” – Mohammad Nurul Amin. He warned that failing to fix these deficits will erode public trust, weaken lending capacity, and crash credit ratings, triggering a ripple effect across the economy.
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The situation worsens when you consider the massive increase in defaulted loans. At the end of December 2024, Tk 3,45,764.6 million in defaulted loans were recorded, up from Tk 1,45,633 million in December 2023. That’s an annual increase of Tk 1,00,000 million (Tk 1 lakh crore).
Other Alarming Figures:
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Loan write-offs rose to Tk 81,578 million (up by Tk 9,761 million from 2023).
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Rescheduled loans hit Tk 3,45,122 million by the end of 2024.
These financial manipulations have significantly weakened the reserve strength of banks, leading to today’s capital crisis.
Nearly 50% of Banks in Critical Condition
There are currently 61 banks operating in Bangladesh. Of these, 30 banks are facing financial distress, according to Syed Abu Naser Bakhtiar Ahmed, Chairman of Agrani Bank.
“The anarchy created by the previous government is unimaginable. Looting has devastated nearly half of the banking sector,” – Syed Abu Naser Bakhtiar Ahmed. He added that many banks are now unable to pay salaries and allowances to their employees. In some cases, depositors are unable to withdraw money, signaling a potential liquidity crisis.
The implications of this scam are far-reaching:
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Public Trust: At an all-time low, risking mass withdrawals.
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Foreign Investment: Likely to shrink due to poor credit ratings.
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Export-Import: International trade may suffer as banks struggle to open LCs.
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Banking Operations: Lending restrictions, dividend bans, and margin increases are already taking effect.
Experts unanimously agree on three urgent actions:
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Strengthen Loan Recovery Mechanisms: Aggressively pursue defaulted loans.
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Reform Governance: Eliminate political interference in bank management.
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Restore Transparency: Publish regular financial reports and ensure public access.
This isn’t just a financial problem, it is a crisis of governance, accountability and trust. With Tk 2.5 lakh crore looted over 15 years, the time has come for Bangladesh to make radical reforms in its banking sector before the system collapses under its own weight.
