The International Monetary Fund (IMF) is set to investigate the long-standing concealment of a massive amount of non-performing loans (NPLs) in Bangladesh’s banking sector, aiming to identify those involved in the large-scale cover-up.
Officials at Bangladesh Bank confirmed that the global lender raised serious questions about whether the years of underreporting were the result of deliberate manipulation or negligence during bank inspections.
The issue came to the forefront during a meeting between an IMF delegation and central bank officials on Tuesday (November 4). The IMF reportedly demanded an explanation on how the true scale of defaulted loans was hidden and why discrepancies went undetected in successive inspections.
A Bangladesh Bank official, seeking anonymity, said the recent change in government had exposed the “veil of secrecy” surrounding the banking sector, with updated data revealing a dramatic surge in NPLs.
According to new figures, total defaulted loans have ballooned from around Tk 4 lakh crore to more than Tk 6.5 lakh crore within a year. Default rates in state-owned banks now exceed 40 percent, while private banks are reporting over 10 percent.
The revelation poses a major challenge to one of the IMF’s key loan conditions — reducing NPLs in state-run banks below 10 percent by 2026 under the $4.7 billion support programme.
The IMF’s inquiry will focus on how loans were classified, whether legal loopholes were used to hide defaults, and if inspection officers were negligent or complicit in masking the true financial picture.
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