BB announces plan to lower classified loans below 8%

Bangladesh Bank (BB) has set a target of reducing classified loans to below 8 per cent of the country’s total outstanding loans within June 2026 to ensure corporate good governance in the banking sector.

To this end, the central bank has prepared a roadmap.

“The central bank aims at reducing classified loans of state commercial banks to 10 per cent and private banks below 5 per cent within this time,” said BB Deputy Governor Abu Farah Md Nasser at a press conference at its headquarters in the capital on Sunday.

The central bank eased the loan write-off policy under the new framework allowing the banks to write off loans in two years instead of the existing three years which will help cut default loans by 2.76 per cent or Tk 43,300 crore.

The ratio of gross classified loans in the banking sector stood at 9.93 per cent at the end of September 2023.