The business and trade sector now holds the highest share of defaulted loans in Bangladesh’s banking system, with 42.5 percent of loans in the sector classified as non-performing, according to the December-based “Banking Sector Update” report. The industrial sector follows with a 30.8 percent default rate, while the overall banking sector average stands at 31.2 percent. As of December, total outstanding loans amounted to Tk 18.21 trillion, of which Tk 5.57 trillion were defaults.

Sector insiders attribute the rise in defaults to economic pressures and a deteriorating business environment. Increased living costs have reduced consumer purchasing power, leading to lower demand and sales. Rising costs of raw materials, fuel, transport, and imports, along with dollar shortages and import restrictions, have further strained businesses. Higher interest rates have also increased debt burdens, particularly for small and medium enterprises with limited capital.

The report shows that large loans remain the most default-prone, though rescheduling policies have slightly reduced the rate since September. Agriculture, construction, and transport sectors also show high default ratios, while consumer loans remain relatively stable at 3 percent.