Rupali Bank’s bad loan burden remains concentrated among 20 large borrowers

Highlights

Rupali Bank recovered only Tk4.03 crore from its top 20 defaulters in H1 2026 out of Tk9,859 crore outstanding, nearly half its total non-performing loans.
Rupali Bank faces a capital shortfall of Tk18,026 crore (regulatory forbearance reduces to Tk5,232 crore), reports net loss of Tk397 crore and operating loss of Tk233 crore up to June.
Persistent large loan defaults force Tk490 crore in write-offs in H1 2026 and tie up provisions, constraining fresh credit, impacting sector profitability, and dragging on share price.

Defaulted loan concentration and recovery trend

As reported by The Business Standard, citing Bangladesh Bank’s Supervisory Data Management and Analytics Department, Rupali Bank recovers only Tk4.03 crore from its top 20 loan defaulters in the first half of 2026, despite having Tk9,859 crore outstanding to those borrowers. That amount represents nearly half of the bank’s total non-performing loans of Tk19,804.59 crore in June, or 37.98% of its total outstanding loans of Tk47,906 crore.

The figures underline the lender’s continued difficulty in recovering large defaulted loans, as weak collection, loan write-offs and lengthy court cases keep pressure on its balance sheet. Recovery from the top 20 defaulters fluctuates sharply over recent years, with collections at Tk45.70 crore in 2024, rising to Tk361 crore in 2025, before falling to Tk4.03 crore in January to June 2026.

Overall recovery from non-performing loans stands at Tk381 crore in 2024 and Tk1,274 crore in 2025. In the first six months of 2026, the bank recovers Tk330 crore against a full-year target of Tk2,300 crore.

Beximco Group leads the list of largest defaulters with Tk994 crore in outstanding loans, followed by Bangladesh Sugar and Food Industries Corporation with Tk908 crore and Crony Group with Tk872 crore. Other major names include Jute Textile Mills, Noorjahan Group, HS Composite, Madaripur Spinning Mills, Badar Spinning Mills, Dolly Construction, Sattar Group, Benitex Industries, Crescent Jute Mill, Global Trading Corporation, Sonali Traders, Bashundhara Multi Paper Industries, Bashundhara Paper Mill Limited, Thermex Group companies, Galco Steel (Bangladesh) Limited, Universal Medical College Hospital Limited, Bengal Leather, Japan Bangladesh Securities Paper Limited and Vargo Media.

Rupali Bank tells Bangladesh Bank that Bashundhara Paper Mill Limited and Universal Medical College Hospital Limited exit default status through rescheduling in April, while Benitex Industries and Jute Textile Mills do so in May. Even so, the bank continues to write off large volumes of bad loans, with Tk490 crore written off in the first half of 2026 after Tk518 crore in 2024 and Tk494 crore in 2025.

Recovery from written-off loans also remains limited. Rupali Bank collects Tk4.14 crore from that category in January to June 2026, compared with Tk44.25 crore in 2024 and Tk25.18 crore in 2025, while 2,596 cases involving Tk12,664 crore remain pending with Artha Rin Adalats as of June.

Capital pressure and wider banking impact

Alongside its high bad loan ratio, Rupali Bank faces a severe capital shortage, with its actual capital shortfall at Tk18,026 crore in June. After regulatory forbearance, that gap falls to Tk5,232 crore, while the bank also reports an operating loss of Tk233 crore and a net loss of Tk397 crore up to June.

At the end of June, the bank’s deposits stand at Tk72,636 crore against loans of Tk47,906 crore, resulting in a loan-to-deposit ratio of 70.43%. Banking analysts say persistent long-term defaults are tying up funds in provisioning, reducing banks’ capacity to extend fresh credit to productive and profitable sectors and increasing risks for the broader financial system.

National Professor Mahbub Ullah says at a programme in Dhaka on Saturday that non-performing loans, now exceeding 32% of total loans in Bangladesh’s banking sector, are disrupting the normal cycle of loan recovery and reinvestment. That pressure is affecting profitability, capital adequacy, fresh lending and overall economic activity, while recurring losses and capital shortages at listed Rupali Bank are also weighing on investor sentiment and its share price, according to market participants.

Despite these weaknesses, Rupali Bank exceeds its agricultural lending targets in each of the past two fiscal years, disbursing Tk400 crore in fiscal 2024-25 and Tk505 crore in FY26. Bangladesh Bank is also taking steps to curb bad loans and restore governance in state-owned lenders, including Prompt Corrective Action measures, changes to the loan write-off policy, pressure for faster disposal of Artha Rin Adalat cases, tighter restructuring and rescheduling rules, and monthly and quarterly cash recovery targets for the top 20 defaulters.

Our earlier article on sovereign resilience in a higher-rate regime explained how prolonged geopolitical shocks and elevated public spending are increasing borrowing and refinancing risks as global funding costs stay high. It noted that emerging and frontier markets are especially exposed because debt-service burdens are often heavy relative to limited government revenue, while energy and food price pressures keep inflation elevated and worsen fiscal stress.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.