Non-performing loans (NPLs) at Social Islami Bank PLC (SIBL) have surged to 80 per cent under a central bank-appointed administrator, while cash recovery has collapsed to zero – raising serious questions about whether policy support meant to stabilise the lender has been effectively withheld.
The latest figures were finalised by administrator Md Salah Uddin at a meeting with senior officials at the bank’s headquarters on Saturday, a weekly holiday, according to documents reviewed by TIMES of Bangladesh.
The intervention by Bangladesh Bank was intended to stabilise the troubled lender and prepare it for merger. Instead, the data show a continued deterioration in both asset quality and recovery performance.
When the administrator was appointed on November 5, 2025, SIBL’s NPL ratio stood at around 75 per cent. Just two months earlier, in September, it had been slightly above 62 per cent.
Since then, classified loans have risen further, while recovery has effectively broken down, with no cash recovery recorded in March 2026.
The data suggest that the deterioration is not merely a legacy problem, but a breakdown in the application of recovery policy at a critical stage of restructuring.
Analysis of internal documents, along with interviews with officials and affected borrowers, indicates that the decline is not solely due to weak loan quality.
A key factor appears to be the non-application of central bank-designed policy support measures intended to reduce defaults and restore cash flow.
On October 7, 2025, Bangladesh Bank issued a circular instructing banks to support large industrial groups that had become defaulters due to adverse conditions.
The policy allowed loan rescheduling with a 2 per cent down payment – 1 per cent at the time of application and the remaining 1 per cent within six months – along with a one-year grace period and repayment tenure of up to 10 years.
The directive was sent to all banks and financial institutions, including SIBL. However, in SIBL’s case, multiple stakeholders allege that these provisions have not been implemented. Instead, borrowers seeking restructuring or
one-time exit facilities have been asked to repay loans in full or transfer liabilities to other banks. The collapse in recovery is stark. In the first four days of November 2025, before the administrator took charge, the bank recovered about Tk410 crore from defaulted loans.
In the remaining 26 days of that month, recovery fell sharply to Tk37 crore. It stood at Tk103 crore in January and around Tk176 crore in February, before dropping to zero in March.
This collapse has come despite policy tools designed to enable partial regularisation of loans and restore liquidity.
A letter from Joy Trade International, seen by TIMES, illustrates how the policy gap has played out in practice.
The company deposited Tk1.5 crore – 5 per cent of its outstanding loan – and applied for a one-time exit facility. In its letter, the firm says its business “ceased completely in 2016” and that in 2018 its loan was rescheduled without consent, increasing the principal from Tk11.82 crore to Tk15.80 crore.
The company further claims that, following multiple meetings with bank officials, an understanding had been reached to allow settlement through payment of the original principal, describing the matter as “a settled issue”.
However, its application was rejected after four months, putting its export-oriented operations at risk of closure.
Officials say this is not an isolated case. Several large groups, including Bashundhara, Orion and Rupayan, have reported similar experiences.
Despite qualifying under the central bank’s policy, they were allegedly denied restructuring facilities. “If we had the capacity to repay in full, there would have been no need for policy support,” a senior executive of a leading industrial group told TIMES. “Instead, we are being pushed further into distress.”
Documents available with TIMES show that SIBL has missed the opportunity to regularise at least Tk1,776 crore in defaulted loans due to the non-implementation of policy support. This includes Tk1,536 crore owed by Bashundhara Group, Tk151 crore by Orion and Tk89 crore by Rupayan.
Bank officials said files recommending rescheduling had been prepared and forwarded to the administrator but did not move forward.
The most critical signal of stress now lies in cash flow. While restructuring or one-time settlements could have reduced classified loans on paper, the absence of such measures has resulted in a complete halt in recovery, raising concerns about liquidity and solvency.
Responding to queries, Bangladesh Bank spokesperson Arief Hossain Khan said the authority to decide on loan restructuring has been delegated to individual banks.
“Banks can allow rescheduling with lower down payment based on banker-customer relationships,” he said. Repeated calls and messages to SIBL administrator Md Salah Uddin for comment went unanswered. After initial contact attempts, his phone was found switched off.
The developments raise a broader question for the ongoing banking sector consolidation: whether the restructuring process is facilitating recovery, or inadvertently deepening the crisis within already fragile institutions.
