A staggering Tk14,156 crore in non-performing loans has been accumulated by Rupali Bank, primarily from its 32 largest borrowers. These borrowers, who received credit far beyond regulatory limits, now pose a significant challenge to the bank's financial health.
The documents reveal a concerning trend: 47 clients were granted loans exceeding 10% of the bank's regulatory capital, classifying them as "large borrowers." Among these, 32 borrowers now account for a staggering 63% of the bank's total funded loans, with individual exposures surpassing the 25% capital ceiling designed to mitigate risk.
Kazi Md Wahidul Islam, the bank's managing director, attributes most of these problematic loans to approvals made before his tenure. He assures that recovery efforts are underway, with legal actions taken against some borrowers and rescheduling plans tailored to their repayment abilities.
When asked about lending beyond the 25% exposure cap, Islam responds, "Special circumstances necessitated such approvals." But here's where it gets controversial: bankers and analysts point to weak transparency, political influence, and regulatory leniency as factors allowing large borrowers to secure excessive credit from state-owned banks, especially during periods of economic stress.
Bangladesh Bank's large loan policy sets a clear limit: a bank's exposure to a single borrower or group must not exceed 25% of its eligible capital. If this limit is breached, new lending must cease, and a risk-reduction plan must be implemented promptly. However, the policy also allows banks to lend up to 25% to "large" borrowers, defined as those with loans exceeding 10% of regulatory capital.
By December 2024, 18 Rupali Bank clients had received loans beyond capital limits under special approvals. The top 16 defaulters alone owed a substantial Tk7,660 crore. Arif Hossain Khan, a spokesperson for Bangladesh Bank, emphasizes that single-borrower limits are crucial to prevent excessive risk concentration and safeguard banks from collapse.
He adds that some borrowers failed to settle non-funded liabilities, forcing banks to convert them into funded loans, thus inflating exposure. Khan cites political intervention as a factor in large loans, particularly those linked to major conglomerates. He mentions the cases of S Alam Group and Beximco, where loans were approved to avoid commodity shortages and employment risks, respectively.
Rupali Bank, formed through the merger of three banks in 1972, has recently faced mounting financial strain. Among state-owned commercial banks, it now has the second-highest default rate after Janata Bank. As of September, defaulted loans stood at 20% at Sonali Bank, 40% at Agrani Bank, 70% at Janata Bank, and a concerning 51% at Rupali Bank.
Despite these defaults, Rupali remained profitable last year, alongside Sonali Bank, while Janata and Agrani recorded significant losses. Rupali's net profit was Tk8 crore, compared to Tk866 crore at Sonali Bank, with Janata and Agrani reporting losses of Tk3,071 crore and Tk937 crore, respectively.
Listed on the stock market since 1986, Rupali Bank posted net profits of Tk21 crore in 2022 and Tk54 crore in 2023. Central bank data reveals that defaulted loans stood at Tk5,273 crore in 2021, representing 14.9% of total loans. This figure rose to Tk6,630 crore in 2022, or 15.5% of outstanding credit, and has accelerated sharply in the past two years.
By June 2025, defaulted loans at Rupali Bank had surged to Tk22,180 crore, or 44% of total loans. By September, this ratio climbed to a concerning 51%, reaching Tk23,712 crore. The top 20 defaulters alone account for Tk12,263 crore, or 55% of total defaulted loans. As of June, the bank had recovered only Tk90 crore from these borrowers, meeting just 17% of its recovery target.
At the end of June, Rupali Bank's required capital stood at Tk9,882 crore, while its maintained capital was negative Tk13,657 crore, resulting in a capital shortfall of Tk23,240 crore. This is accompanied by Tk15,542 crore in provisioning deferrals from the central bank.
Among Rupali Bank's largest defaulters are Blue Planet Group (Tk1,049 crore), Beximco Limited (Tk990 crore), Bangladesh Sugar and Food Industries Corporation (Tk900 crore), Crony Apparels (Tk850 crore), and Jute Textile Mills (Tk720 crore). Other major defaulters include MSA Textile Limited (Tk580 crore), Unitex Group (Tk670 crore), Nurjahan Group (Tk630 crore), AA Knit Spin (Tk640 crore), Madaripur Spinning (Tk620 crore), and Dolly Construction (Tk505 crore).
Interestingly, defaults at Rupali Bank are concentrated in just five branches, which account for Tk15,394 crore, or 55.37% of total loans. The Local Office branch alone holds more than 36% of total lending, despite the bank's nationwide presence of 586 branches.
Arfan Ali, a former managing director at Bank Asia, suggests that deliberately defaulting clients often avoid multiple branches, concentrating their loans in a select few. These clients may use political influence to control the board and management, further concentrating loans in specific branches. In some cases, loan volumes exceed deposits, creating opportunities for misappropriation through interbank transfers.
In 2025, Rupali Bank's interest income was Tk1,732 crore, while interest expenses amounted to Tk2,320 crore, resulting in a negative net interest income of Tk597 crore. Its return on assets and return on equity stood at a mere 0.01% and 0.5%, respectively, highlighting the severity of its financial challenges.
And this is the part most people miss: the impact of political influence and regulatory forbearance on state-owned banks. It's a complex issue with far-reaching consequences. What are your thoughts on the role of politics in banking? Should there be stricter regulations to prevent such situations, or is there a better way to manage these risks? We'd love to hear your opinions in the comments below!
