The capital shortfall of 24 scheduled banks in Bangladesh hit Tk155,867.27 crore at the end of June this year, up sharply from Tk110,260 crore across 23 banks in March, exposing a banking sector crisis.
According to a latest Bangladesh Bank report, NRBC Bank and Al-Arafah Islami Bank have newly entered the list for the first time, while Habib Bank, a foreign commercial bank, has managed to exit from an earlier list.
Economists and bankers attributed the worsening capital situation to widespread irregularities and loan scams under the previous government, where large volumes of loans were disbursed without proper due diligence and later concealed.
Following the assumption of office by the interim government, many of these hidden default loans were brought to light, increasing the official non-performing loan (NPL) figures.
As banks struggle to maintain required provisions against bad loans, they are losing capital — a development that now exposes a serious threat to the stability of the entire financial sector.
Data analysis revealed that four state-owned commercial banks, two specialized banks, eight Islamic banks, and 10 private commercial banks are in a provision shortfall crisis.
Critical CRAR
The Capital Risk-weighted Assets Ratio (CRAR) in the banking sector has decreased to 4.47% at the end of June.
Scheduled banks in Bangladesh must maintain a minimum CRAR of 12.5%, composed of the 10% base Minimum Capital Requirement (MCR) and the 2.5% Capital Conservation Buffer (CCB).
At the end of March, the CRAR in the banking sector was 6.74%.
CRAR is a measure of a bank’s capital in relation to its risk-weighted assets, which indicates financial strength and stability.
It ensures a bank has enough capital to absorb potential losses and protect depositors, and it is a key requirement under international banking regulations like the Basel Accords.
A higher CRAR signifies a more stable bank with greater capacity to handle risky assets.
Expert opinion
Dr. Zahid Hussain, former lead economist of the World Bank’s Dhaka office, told Dhaka Tribune that the rising capital shortfall indicates that financial institutions are weakening. It was previously concealed, but this is no longer the case.
“Additionally, the leniency previously granted in cases of defaulted loan rescheduling, which lasted 180 days, has now been reduced to 90 days in accordance with international standards. These changes are exposing the true condition of the banking sector,” he explained.
If irregularities are not addressed before capital restructuring, the crisis will worsen significantly, Hussain added.
Mahbubur Rahman, CEO of Mutual Trust Bank, also told the media that a significant portion of the NPL surge is due to past irregularities and alleged large-scale loan corruption under the previous government. Following the recent change in the political landscape, banks are now beginning to report these previously hidden or ‘evergreened’ debts as genuine defaults, leading to a record increase in NPL figures over the last few quarters.
This surge in NPLs has, in turn, escalated the size of banks’ risk-weighted assets, further increasing the requirement for capital, he added.
Top 10
The capital shortfall hit all four types of banks.
Data analysis shows that, among the top specialized banks, Bangladesh Krishi Bank (BKB) recorded the highest overall capital shortfall at Tk29,160.95 crore as of June.
Among others, Shariah-based Union Bank PLC took the second position with Tk21,387.15 crore of shortfall; next is Islami Bank Bangladesh Limited (IBBL) with Tk18,503.55 crore of capital shortfall.
Then Janata Bank (Tk17,025.44 crore), FSIBL (Tk10,501.44 crore), NBL (Tk8,459.26 crore), Agrani Bank (Tk7,697.67 crore), AB Bank (Tk6,774.79 crore), Padma Bank (Tk5,619.36 Crore), and GIBL (Tk5,551.93 crore) placed respectively.
Others
As of June 2025, 14 other banks in the list included Basic Bank (Tk3,782.55 crore), Rupali Bank (Tk4,172.82 crore), Bangladesh Commerce Bank (BCBL) (Tk1,878.19 crore), Citizens Bank (Tk86.30 crore), IFIC Bank (Tk4,051.25 crore), NRB Commercial Bank (NRBCBL) (Tk315.91 crore), Premier Bank (Tk1,639.60 crore), Shimanto Bank (Tk44.59 crore), United Commercial Bank (UCBL) (Tk1,385.19 crore), Al-Arafah Islami Bank (Tk254.41 crore), Exim Bank (Tk900.56 crore), Investment Corporation of Bangladesh (ICB) (Tk1,975.17 crore), Social Islami Bank (SIBL) (Tk2,079.08 crore), and Rajshahi Krishi Unnayan Bank (Rakub), which posted a capital shortfall of Tk2,620.11 crore.
