The banking sector in Bangladesh witnessed a significant reduction in non-performing loans (NPLs) during the fourth quarter of 2025, primarily attributed to an aggressive debt rescheduling campaign under relaxed central bank policies. This decline is a result of a special policy introduced in September 2024, which allowed affected borrowers to reschedule classified loans for up to 10 years with a low down payment and a grace period. The policy support played a pivotal role in reducing defaulted loans, enabling banks to improve their NPL ratios. However, concerns arise regarding the sustainability of this improvement, as many rescheduled loans may generate limited recovery and could potentially turn non-performing again in the coming years, posing risks to depositors and the banking sector's stability.
