The Finance Minister has disclosed the names of the top 20 loan defaulters in Parliament on 6 April 2026, and 9 of the top 20 belong to the controversial S Alam Group, a much-talked-about business conglomerate. The group’s chairman Saiful Alam also faces various charges related to multiple embezzlement and money laundering cases. These groups allegedly siphoned off billions of takas via shell companies and unsecured loans. In the 1990s, foreign banks and even the parliament publicly named defaulters, but there was no improvement in NPLs in the banking sector. The disclosed list contradicts the widely believed perception that business houses take loans and launder the money abroad. About half of listed default companies are related to one person. The totals list revealed a few businesspeople close to the political regime responsible for the default loan.
Bangladesh has one of the harsh loan recovery laws in the known world. The Artho Rin Adalt Act has conflicts with the basic human rights of the borrowers. As per some other laws of Bangladesh, the legal measures against willful defaulters include participating in elections for any public office, directors of any trade body, banning foreign travel, suspending trade licenses, and preventing them from becoming bank directors for five years. Recently, The Association of Bankers, Bangladesh (ABB) has submitted a series of aggressive proposals to the central bank, seeking authority to publicly shame loan defaulters. Such action is restricted by confidentiality rules under Article 46 of the Bangladesh Bank Order, 1972, which protects credit information.
Another attempt by Bangladesh Bank to publish defaulters’ lists in 2014 at the branch level was halted by directives from the High Court. Most of the citizens are happy to see the disclosure of the names of the loan defaulters, irrespective of whether they are willful or non-willful defaulters. A tiny section of civil society has raised concerns that publishing these names in newspapers could damage reputations before legal processes are fully concluded.
The poor loan supervision and management facilitate the diversion of funds. Experts also stress that the NPL problem is not new – it was simply hidden for years. Accurate information on NPLs was not disclosed, and there was a bad practice of hiding them. Many defaulted loans were previously concealed. During the interim government. Bangladesh Bank has reinstated its 2012 loan-classification rule by reducing the overdue period for term loans by six months, in line with conditions set by the International Monetary Fund (IMF) under its $4.7 billion loan programme. Under the revised rule, a borrower becomes classified the day after the instalment payment falls due, meaning a loan will enter classification after three months of non-payment. Previously, loans were classified nine months after the instalment expiry date.
The procedure of identification of sickness and willful default available in international best practices in classification is enforced. An asset quality review conducted by a foreign firm uncovered the true extent of defaults in several private banks that had been masking their bad loans under the previous regime.
Banks in other countries continuously review their borrowers and gradually downgrade them based on performance. In Bangladesh, bankers do not maintain proper grading of borrowers, even when they know the actual condition of the business. Some bank management teams deliberately avoid downgrading borrowers despite knowing their weak performance.
There are some other factors also. Some businesses became defaulters simply because they could not obtain utility connections for years. They had to start paying loans and interest even before their factories became operational. They become defaulters even before the start of commercial operation.
Borrowers showing early signs of distress should be reviewed frequently and warned promptly. But in Bangladesh, banks wait until the last moment and classify borrowers only when the situation becomes unmanageable, which causes the sudden spike in default loans. There is hardly any responsibility for the collection of bad loans. The banker only goes to the Artho Rin Adalat Court and files a recovery suit. There is no legal definition of Willful Default or Willful Defaulter, or what would be the punitive measure against such a borrower. Therefore, the Willful borrowers could not be brought into books, and non-willful defaulters could not be exempted from various concessions allowed by the bank in general.
The previous government had given the Director some unprecedented liberty and dominance over the banks. They have increased the provision of the maximum number of members in the Board of Directors from the same family from 2 to 4 (in addition to that, there exists scope for appointing near relatives of the same family as Director that also helps strengthen the grip of a particular family further on a commercial bank). The law also allows the successive appointment of the same Director for three tenures instead of two tenures (each tenure is for three years). The Bank was supposed to be a public company but became a family business of a few families close to the powerful lobby.
According to a study of TIB, there are allegations of creating pressure on the Bangladesh Bank when it tries to take measures against irregularities and corruption. Telephone calls from highly influential political positions like ministers are made to create such pressure. High government officials, having good relations, are contacted from outside to intimidate or discourage in taking measures. It is also alleged that the observers appointed in banks in bad shape cannot play or do not play their desired role.
The laws and policies relevant to supervision also do not fully comply with international standards, e.g., the Basel Principles. The Basel Committee on Banking Supervision formulated principles and rules aiming at reducing risk assets and strengthening the financial sector. Moreover, the existing law and policy for banking sector supervision in Bangladesh do not fully comply with the Core Principles for Effective Banking Supervision, that focuses on the powers, responsibilities, and functions of supervisors.
Not only loan defaulters but also the role of loan offenders, such as bankers, political leaders and others, should be evaluated. The experience says that bringing them accountable as per the standard Core Principles for Effective Banking Supervision of Basel, which focuses on powers, responsibilities, and functions of supervisors.
The writer is the CEO, Bangla Chemical & Legal Economist. E-mail: [email protected]
