Bangladesh has a total of 57 banks yet 10 state-owned commercial banks (SOCBs) account for about 28% of total assets in the country, according to the central bank, Bangladesh Bank. Now some of these SOCBs are essentially insolvent, and are threatening the stability of the banking system – despite the country's economy being the third fastest growing in the world.
The banking system’s biggest issue is the deterioration in asset quality over the past few years. The overall non-performing loan (NPL) ratio jumped to 11.9% in March 2019, up from 9.3% at the end of 2017, according to the central bank. The SOCBs had an NPL ratio of about 30% at the end of 2018, and accounted for more than half (52%) of total default loans in the industry.
