Bangladesh Bank has issued a strict ultimatum to 29 banks with high levels of default loans, directing them to reduce their non-performing loan (NPL) ratios within six months. Banks with NPLs above 20 percent must bring them below that threshold, while those already under 20 percent must lower them to below 10 percent. Failure to comply will result in the transfer of default loans to an asset management company. The directive was delivered by Governor Mostakur Rahman during meetings with managing directors of the affected banks held between July 12 and 19, 2026.

The central bank emphasized that no dividends can be distributed from unrealized interest on toxic assets and instructed banks to resolve long-standing classified loans through legal or alternative dispute resolution processes. It also warned against irregularities and urged bank boards to act independently of political pressure. According to Bangladesh Bank data, the country’s overall default loan ratio rose to 32.26 percent by March 2026, the highest in South Asia.

Officials said the move aims to restore stability in the banking sector by enforcing strict monitoring and accountability among weak banks.