The defaulted loans in 10 banks, including four state-run lenders, increased at an alarming rate in fiscal 2022-23, indicating their worsening financial health.

At the end of June, the ten lenders' bad loans stood at Tk 69,671 crore, which is 45 percent of the record Tk 156,039 crore of defaulted loans logged in by the banking sector. A year earlier, the ten banks' defaulted loans accounted for 38.2 percent of the sector's total.

ICB Islamic Bank, which was born out of the scam-riddled defunct Oriental Bank, has as much as 86.65 percent of its total disbursed credit defaulting as of June 30, up from 82.61 percent a year earlier, according to the Bangladesh Bank's latest published data.

State-owned Basic Bank, which saw rampant financial irregularities during the tenure of its former chairman Sheikh Abdul Hye Bacchu, has as much as 62.66 percent of the total disbursed credit going bad as of June 30.

A year earlier, the lender's defaulted loans accounted for 58.86 percent of total loans, according to the Bangladesh Bank's latest published data.

Bangladesh Commerce Bank, where Chattogram-based conglomerate S Alam Group has a stake, has 50.49 percent of its loans go bad at the end of June, up from 42 percent a year earlier.

Bangladesh Development Bank, another state-owned commercial bank, has as much as 44 percent of its disbursed credit turn sour, up from 36.07 percent a year earlier.

State-run Janata's defaulted loans soared much last year.

At the end of June, its total defaulted loans stood at Tk 28,541 crore, which is 32.6 percent of its total disbursed loans and the highest in the banking sector. 

A year earlier, its soured loans accounted for 24.91 percent of its total loans.

"We are trying to recover the bad loans -- there are some issues but nothing bad is happening," Md Abdul Jabbar, managing director of Janata Bank, told the correspondent at his office in Motijheel on October 2.

The bank is not able to recover the large amounts of loans from some of its large borrowers, which have turned into defaulted loans, said Janata Bank officials on the condition of anonymity.

Agrani Bank had the next highest proportion of defaulted loans: it was 23.51 percent of total disbursed credit as of June, up from 17.23 percent a year earlier.

Its soured loans increased largely due to approving huge volumes of loans without due diligence in recent years, said Agrani Bank officials on the condition of anonymity.

Murshedul Kabir, managing director of Agrani Bank, could not be reached for comment at the time of filing the report.

AB Bank's defaulted loans rose to 18.61 percent of total outstanding loans from 14.46 percent a year earlier.

Mercantile Bank's defaulted loan rate stood at 8.3 percent, up by 3.91 percentage points from a year earlier.

Defaulted loans at Mercantile Bank increased due to the withdrawal of a central bank relaxation on loan classification introduced during the pandemic, said a senior official of the bank on the condition of anonymity.

"Now, borrowers are not interested in repaying bank loans using the ongoing economic situation as an excuse," he said.

Army-owned Trust Bank's defaulted loans stood at 7.69 percent, up by 3.48 percent a year earlier.

UCB's defaulted loan rate rose by 1.94 percentage points to 6.64 percent.

"There are some wilful defaulters who have no intention to pay back bank loans while some borrowers have a tendency to divert funds to the sectors not specified in the loan proposals," said Anis A Khan, a former chairman of the Association of Bankers, Bangladesh, a platform of banks' chief executives.