Bangladesh Bank targets reducing default loans to 8 below percent of the country's total outstanding loans within June of 2026 in order to ensure corporate governance in the banking sector.

The banking watchdog has prepared an action plan to materialise the plan, BB Deputy Governor Abu Farah Md Nasser said at a press conference at its headquarters in Dhaka today.

The central bank aims at reducing nonperforming loan (NPL) of state commercial banks to 10 percent and private banks below 5 percent within the next two and a half years, according to the action plan shared at the briefing.

The ratio of gross NPLs in the banking sector stood at 9.93 percent at the end of September 2023, up from 9.36 percent in September 2022.

The ratio of default loan was 10.11 percent of the total outstanding loans in June 2023.

At the end of September last year, the NPL ratio of state banks was 21.7 percent of their outstanding loans.

The ratio stood at 7.04 percent for private banks, according to the BB data.