The Bangladesh Nationalist Party (BNP) and its allied parties have emerged victorious in the 13th national parliamentary elections and are set to form the government. Analysts, however, warn that the current situation is far more complex than in previous years. The new administration faces the formidable task of restoring discipline in the financial sector, reducing non-performing loans (NPLs), and rebuilding investor confidence.
Rebuilding the banking and financial sector is now the government’s most urgent test. Experts stress the need for a strong legal framework, enhanced capacity of the central bank, reduced political interference, and good governance. Economists emphasize that a stable and predictable financial system is essential for boosting investment, generating employment, and steering the economy toward sustainable recovery.
Record Burden of Non-Performing Loans
The banking sector’s NPL ratio has surged to 35.73%, totaling over Tk 6.44 lakh crore, up from 16.93% in September 2024. Similar crises persist across other financial institutions. Economists warn this poses a major risk to overall economic stability. Political influence, misuse of loan rescheduling, and inaction against deliberate defaulters have worsened the situation. Experts call for revitalizing productive sectors, enforcing strict legal measures, strengthening the central bank, and ensuring institutional governance.
Transparency and trust in the financial sector are seen as critical to attracting both domestic and foreign investment.
M Helal Ahmed Jony, Research Fellow at Change Initiative, noted that the Tk 6.44 lakh crore in NPLs represents a severe risk to the entire economy. He stressed continuing banking reforms, reinforcing central bank independence, and strengthening institutional governance across all financial institutions.
Legacy of Financial Irregularities
During the Bangladesh Awami League government, widespread corruption, mismanagement, and money laundering plagued the financial sector. Several banks and financial institutions were left practically inoperative, leaving depositors uncertain about their funds.
The interim government merged five troubled banks—First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and Exim Bank—into the “Combined Islami Bank,” covering nearly 7.5 million account holders and deposits of Tk 1.31 lakh crore. Closing six other failing institutions remains a significant challenge.
Investment and Employment Crisis
Political unrest and uncertainty have stalled investment, hit employment hard, and disrupted export-oriented industries, reducing export revenue. Experts suggest reviving closed industries and businesses to create immediate employment, as establishing new factories is a long-term solution.
Dr Mostafizur Rahman, Honorary Fellow at the Centre for Policy Dialogue (CPD), said the government’s main challenges include resolving investment stagnation, creating employment, controlling inflation—which currently exceeds 8%—increasing private-sector credit, and restoring investor confidence.
Law, Order, and Trust Deficit
Mohammad Hatem, President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), emphasized that restoring law and order is essential for business and industry to function normally. Strict enforcement against corruption and extortion is critical to economic revival.
Professor Dr Abdul Bayes, former Vice-Chancellor of Jahangirnagar University, highlighted that domestic and foreign investment cannot grow without security and stability. He suggested that special tribunals or separate judicial mechanisms may be required for swift action against loan defaulters, while recovering NPLs and repatriating embezzled funds remains urgent.
Foreign Trade and Policy Review
Analysts note that reviewing trade and economic agreements with countries such as India and the United States is essential to protect national interests. Restoring confidence in international markets and creating an investment-friendly environment are key to a faster economic recovery.
Dr Zahid Hossain, former Chief Economist at the World Bank’s Dhaka office, said controlling inflation, restoring economic stability, and rebuilding investor confidence will be top priorities for the new government. Ensuring citizen security is also critical for sustainable growth.
Economic recovery will depend on sound policy decisions, stability, governance, and trust. Experts agree that efficiently addressing these multidimensional challenges is crucial for maintaining public confidence and revitalizing both domestic and foreign economic activities.