Originally posted in Daily Sun on 27 November 2025
Dr Mostafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), has said that ongoing reforms by Bangladesh Bank are revealing previously hidden default loans in the banking sector.
“Many loans that were earlier shown as regular—or kept concealed—are now being exposed due to these reforms. This is why the volume of default loans suddenly appears higher,” he said during an interview with Bangladesh Pratidin yesterday.
According to Dr Rahman, Bangladesh Bank has introduced several measures to enhance transparency and accountability in the financial sector. As a result, loans that were not previously classified as defaults are now being accurately reported. “So it may seem that default loans are rising, but this is not due to new defaults or fresh lending—it’s because earlier hidden loans are now being properly classified,” he explained.
He added that the central bank’s reform initiatives include increasing transparency and accountability, strengthening its autonomy, merging weak banks, establishing an asset management company, seizing and selling assets of defaulters, and enforcing tighter monitoring such as freezing shares in the capital market.
“Many clients’ assets and shares are already being seized,” he said. “These measures must be intensified. If the reforms are successfully implemented, the health of the banking sector will improve, and default loans will gradually decline.”
Dr Rahman views the rise in reported default loans as a positive indicator of growing transparency in the banking sector. “Bangladesh Bank is now presenting the real picture clearly—this is the true reason behind the apparent increase in defaults,” he said.
