The primary focus of the central bank as the supervisor of the banking system is to maintain the stability of the banking system and the economy as a whole. As a result of prudent and planned policy actions by the central bank, the economy of Bangladesh experienced a resilient recovery from the economic shocks of the COVID-19 pandemic. To support smooth operation of the schedule banks and non-banking financial institutions (NBFIs) under this critical juncture, BB has emphasised the continuance of the prudential measures taken at the inception of the pandemic, though with some fine-tuning. However, the outbreak of the Russia-Ukraine war posed significant challenges to the effort to accelerate growth. Particularly, the supply-chain shocks in terms of higher fuel and commodity prices and disruptions in the global delivery system has put pressure in the country’s external balances which in turn, in the form of the exchange rate shock, has affected the balance sheet of the banking sector. To address the external shocks, BB has decided to move toward a more market-based interest rate and exchange rate regime. Nonetheless, FY24 saw significant liquidity pressure in the banking sector, especially in the case of several Islamic banks. To mitigate the liquidity shocks and prevent spillover effect of these shocks in other parts of the economy, BB has opened special liquidity support facilities for banks and will continue to provide assistance until the risk subsides. In its effort to strengthen the supervisory framework, BB has introduced several reform programmes with the technical assistance of the IMF and the IFC, namely, the implementation of the risk-based supervisory framework. Also, to improve governance of selected banks with deteriorating financial conditions, BB has initiated a three-year special supervisory programme. Under this programme, selected banks have been given concrete, time-bound targets and are being monitored meticulously as per the terms and conditions of Memorandum of Understandings (MoU). BB, as part of its regular supervisory activities, has continued its offsite supervision and onsite inspections throughout the year.
All banks, except BKB and RAKUB, prepare their balance sheet on calendar year basis, and are obliged to submit their audited balance sheet at the end of every calendar year. That is why banks’ performance-related figures are stated in calendar year basis. Figures reported by Department of Off-site Supervision are different from those of Statistics Department due to different data collecting methods.
Depending on the ownership structure, there are four categories of scheduled banks in Bangladesh: state-owned commercial banks (SCBs), specialised banks (SBs), private commercial banks (PCBs) and foreign commercial banks (FCBs).
Total number of scheduled banks operating in FY24 was 61. The number of bank branches increased to 11088 at the end of December 2024 from 10,937 at the end of December 2022. On the other hand, depending on the mode of operations (e.g. conventional and Islamic Shariah-based), there are three types of banks: full-fledged conventional banks, full-fledged Islamic Shariah-based banks and banks with dual operation. Information on the banking structure and activities by types of banks
As on 30 June 2025 the total number of branches of the 61 scheduled banks were 11,088.
Among these, 46.5 percent (5158) of the bank branches were in rural areas and the rest or 53.5 percent (5923) were in urban areas. The SCBs had 2061 rural branches and 1769 urban branches. Specialised banks had 1153 rural branches and 370 urban branches. Private commercial banks had 1943 rural branches and 3722 urban branches. Foreign commercial banks had 62 urban branches.
In 2024, the total assets of the banking sector stood at Tk 21961.4 billion showing an increase of 7.5 percent over the total assets in 2023. During this period, the SCBs’ assets rose by 10.2 percent and that of the PCBs’ increased by 13.9 percent. The aggregate banking sector assets consisted of Tk 14318.7 billion as loans and advances (65.2 percent of total assets), Tk 245.0 billion as cash in tills including foreign currencies, Tk 990.7 billion as deposit with BB including foreign currencies, Tk 3070.6 billion as investment in (government bills and bonds) treasury securities and rest Tk 3335.5 billion as other assets during the period.
Deposits continued to be the main sources of funds of the banking industry in FY24 and it (excluding inter-bank) constituted 73.0 percent of the total amount of liability and shareholders’ equity in 2023. Total shareholders’ equity of the banks was Tk 1270.1 billion at the end of December 2023 which was Tk 1261.08 billion in June 2025.
Capital adequacy: Capital adequacy focuses on the overall position of bank’s capital and the protection of the depositors and other creditors from potential losses that a bank might incur. It helps the banks to absorb possible losses due to credit, market and operational risks that a bank might be exposed to during its normal course of business. Under Basel-III, banks in Bangladesh are instructed to maintain the minimum capital requirement (MCR) at 10.0 percent of the risk weighted assets (RWA) or Tk 5.0 billion as capital, whichever is higher.
Department of Off-site Supervision
Banking Sector Performance, Regulation and Bank Supervision of regulatory capital of the banking sector was Tk 1571.8 billion as on 31 December 2024 which increased to Tk 1578.1 billion at the end of June 2025. It shows the capital to risk weighted assets ratio (CRAR) by type of banks. It is observed that the CRAR of SCBs, PCBs and FCBs were 6.8, 12.8 and 32.9 percent respectively as on 30 June 2025. Two SBs- BKB and RAKUB failed to maintain MCR on risk weighted assets basis. Besides, 5 SCBs and 5 PCBs could not maintain the minimum required capital. The CRAR of the banking industry as a whole was 11.2 percent at the end of June 2024.
Asset Quality
The most important indicator to understand the asset quality is the ratio of gross non-performing loans (NPLs) to total loans and net NPLs to net total loans. At the end of June 2024, the gross NPL ratio of the banking sector stood at 10.11 percent.
(a) FCBs had the lowest and SCBs had the highest gross NPL ratio at the end of June 2025. FCBs’ gross NPL ratio was 4.8 percent, whereas those of SCBs, PCBs and SBs were 25.0, 6.5 and 12.1 percent respectively at the end of June 2025.
It is observed that the ratio of gross NPLs to total loans and advances indicates a mixed trend in the banking sector during the period from 2014 to June 2025. Asset quality of the banking sector as a whole slightly deteriorated in 2022 and also in June 2025. The gross NPL ratio increased by 2.0 percentage points at the end of June 2025 compared to the end of December 2022, However, NPLs of banking sector reached at noticeably lower, 7.7 percent in 2020 and 7.9 percent in 2021. It is mainly due to providing deferral and soft repayment facilities during the COVID-19 pandemic in that period.
Comparatively inadequate assessment along with poor follow-up and supervision of the loans has eventually resulted into the current situation of poor asset quality of SCBs and SBs.
However, various measures (i.e. strengthening of recovery unit, special recovery programme, etc.) for increasing recovery against loans have been taken by the banks. Ensuring the proper monitoring of regular and rescheduled/restructured loans and the pace in recovery of NPLs may improve the asset quality of the banking industry. Nonetheless, external issues like prolongation of the Russia-Ukraine conflict and other geopolitical issues may result in slow business as well as impaired debt-servicing capacity of the borrowers, which might ultimately deteriorate the asset quality of the overall banking sector in Bangladesh.
The net NPL ratio of PCBs and FCBs remained negative at the end of June 2025. These banks seem to be resilient against a certain admissible level of deterioration in their asset quality. The net NPL ratios in SCBs and SBs stood at 10.78 percent and 0.90 percent respectively at the end of June 2025. Likewise, the trend in gross NPL ratio, the net NPL ratio increased to 1.58 percent at the end of June 2025 compared to -0.08 percent recorded at the end of December 2022.
Total NPLs of the banking sector stood at Tk 1560.39 billion at the end of June 2025. SCBs and PCBs held the largest portion of the NPLs of the industry. The amount of NPLs of the SBs has shown a decreasing trend till 2021 and showed a slight upward movement recently.
The provision maintenance scenario became worse in June 2025. As of end of June 2025, the gross NPLs totalling Tk 1560.39 billion imposed a loan-loss provision requirement of Tk 1010.31 billion, against which the amount of provision maintained was Tk 795.66 billion.
The provision maintained by the banks in June 2025 recorded an increase of 8.77 percent compared to 2022. Thus, the overall provision shortfall stood at Tk 214.64 billion in June 2025 from Tk 110.09 billion in 2022. Consequently, the provision maintenance ratio also decreased to 78.75 percent in June 2025 from 86.92 percent in 2022.
A comparative position of provision against loans (for both classified and unclassified) of four types of banks for 2021, 2022 and June 2025 is illustrated. It can be observed that SBs and FCBs were able to maintain required provision against loans in 2022 and also in June 2025. However, at the same period, SCBs and PCBs could not maintain required provision.
In order to rectify an unnecessarily and artificially inflated size of the balance sheet, a uniform guideline for loan write-off was introduced.
Banking Sector Performance, Regulation and Bank Supervision first in 2005 and later in 2019 through BRPD circular no. 01/2019. Banks can write off bad/loss loans complying with the terms and conditions mentioned in the aforesaid circular. The cumulative amount of written-off loans by different categories of banks is illustrated.
At the end of June 2025, PCBs compose the highest portion of write-off loan totalling Tk 400.64 billion. DFIs had the lowest write-off loan totalling Tk 6.07 billion at the end of 30 June 2025. The total outstanding of written-off loan of SCBs, PCBs, DFIs and FCBs. The outstanding amount of written-off loans is lower than the cumulative written-off loans due to continuous recovery process of banks. It can be observed that SCBs, PCBs, FCBs and DFIs had write-off loan outstanding totaling Tk 182.7 billion, 317.4 billion, Tk 12.1 billion and Tk 3.5 billion respectively at the end of June 2025.
Management Soundness
Sound management is one of the important pre-requisites for the strength and growth of any financial institution. Although there is no direct means to measure management soundness but total expenditure to total income, operating expenses to total expenses, earnings and operating expenses per employee and interest rate spread are generally used to determine management soundness of a financial institution. Besides, issues such as technical competence and leadership of mid and senior level management, compliance with banking laws and regulations, implementation of internal policies, ability to implement strategic plan and taking timely initiatives, etc. are taken into consideration to measure the quality of management.
The expenditure to total income (EI) ratio of the banking sector was 78.3 percent at the end of December 2024. The EI ratio of the SBs was 169.1 percent.
The highest among the bank categories in 2025 mainly due to high operating expenses of these banks. The EI ratios of the SCBs, PCBs and FCBs were 82.3, 76.3 and 35.2 percent respectively in December 2024. The EI ratios of all bank categories in December 2024 showed an increasing trend compared to that of the last year except SCBs and FCBs. The EI ratio of the banking sector stood at 81.1 percent at the end of June 2025. Increasing trend in EI ratio (particularly operating expenses to total expenses) has negative impacts on the net profits of the banks.
Earnings and Profitability
Although various indicators are used to determine earnings and profitability, the most representative and widely used ones are return on assets (ROA), return on equity (ROE) and net interest margin (NIM).
Earnings as measured by ROA and ROE differ among the bank categories. ROA and ROE of four types of banks during the period from 2014 to June 2025. The table illustrates that the ROA of the SCBs and SBs were always less than the industry average ROA. The ROA of SCBs has improved (0.1 percent) in June 2025 as compared to 2022 (0.2 percent). On the other hand, after showing an increasing trend from 2014 to 2016, ROA of PCBs has gradually declined in the recent years. Though ROA of FCBs showed a decreasing trend from 2014 to 2018 but it always remained in a strong position. ROA of the banking sector stood at 0.4 percent in June 2025.
ROE of the SCBs stood at 5.4 percent in 2022 which was -21.6 percent in 2021. ROE of SBs also decreased to -13.7 percent in 2022 from -13.2 percent in 2021 whereas ROE of PCBs increased to 9.4 percent in 2022 from 9.3 percent in 2021. ROE of FCBs has increased sharply to 16.0 percent in 2022 from 7.6 in 2021. ROE of the banking sector stood at 7.9 percent in June 2025. Trends in aggregate profitability ratios for all banks are given as the net interest margin (NIM) of the banking industry stood at 2.4 percent in 2022 which was 2.5 percent in 2021. The NIM for all the types of banks (SBs, PCBs and FCBs) dropped off in 2022 except SCBs as compared to that of 2021. Analysis of the indicator reveals that NIM for PCBs and FCBs was always higher than the industry average. NIM for overall banking sector exhibited a downward trend from 2014 to 2022 except slight increase in 2018 and June 2025. NIM for overall banking sector stood at 2.51 percent at the end of June 2025.
An effective liquidity management helps to ensure bank’s ability to meet cash flow obligations which are uncertain as they are affected by external events and other agents’ behaviour. Indicators like advance-deposit ratio (ADR), statutory liquidity ratio (SLR), interbank call money rate, and repo rate show the real picture of liquidity of the banking sector. On the other hand, one can evaluate bank’s strength to survive in any liquidity stressed situation through liquidity coverage ratio (LCR) and net stable funding ratio (NSFR).
Overall advance deposit ratio (ADR) in the banking sector stood at 79.0 percent in December 2024. The prudential limit of ADR for conventional and Islamic Shariah based banks were 87.0 percent and 92.0 percent respectively.
All scheduled banks are required to maintain cash reserve ratio (CRR) bi-weekly basis at 4.0 percent against their average total demand and time liabilities (ATDTL) of second preceding month with an obligation to maintain daily minimum 3.5 percent cash against the same ATDTL held by the bank. The current rate of statutory liquidity ratio (SLR) for conventional banks is 13.0 percent of ATDTL and in case of lslamic Shariah based banks, the rate of SLR is 5.5 percent of their ATDTL of second preceding month. Four banks (three specialised and BDBL) are exempted from the maintenance of SLR, but these banks have to maintain CRR at the same rate like other scheduled banks.
Banks having off-shore banking operation (OBO) have to maintain CRR and SLR for the liabilities arising from that operation. Scheduled banks having OBO are required to maintain minimum 2.0 percent cash reserve ratio (CRR) on bi-weekly average basis with a provision of minimum 1.5 percent on daily basis of the ATDTL of OBO of second preceding month. The current rate of statutory liquidity ratio (SLR) in this regard for conventional banks is 13.0 percent of ATDTL and for lslamic Shariah based banks, this rate is 5.5 percent of the same ATDTL of second preceding month.
Banks had a reasonable buffer of high-quality assets to cover the cash outflow for a minimum of next 30 calendar days under stressed scenario. The net stable funding ratio (NSFR) of the banking sector, as a whole, was 109.7 percent in June 2025 indicating that banks were also more dependent on stable funding rather than volatile funding to expand their business activities.
Capital Adequacy
Towards building a robust and risk resilient banking system, Basel-III capital and liquidity standards aligned with the international best practices getting momentum in the banking sector of Bangladesh. According to the road map of the phase-in arrangements, December 2019 was the final timeline for the implementation of Basel III framework by the banks. Banks in Bangladesh need to maintain an adequate level of capital requirement in addition of a minimum capital requirement considering their risk profile. Banks are expected to maintain a minimum total capital ratio of 10.0 percent, where 6.0 percent is to be maintained as Tier-1 capital. Besides, all banks must hold common equity tier 1 (CET1) capital (the highest quality and most loss absorbing form of capital) in an amount of at least 4.5 percent of total risk weighted assets (RWA) at all time.
Banks submit capital adequacy reports/- statements following new Basel III accord. It is found that capital to risk weighted asset ratio (CRAR) of the banking industry stood at 11.08 percent at the end of September 2025 while CET1 was 7.35 percent which fulfilled Basel III capital adequacy requirements as a whole. However, at individual level, 51 banks out of 61 scheduled banks are able to maintain CET1 and minimum capital requirements respectively.
In addition of minimum capital requirement (MCR) 10.00 percent, banks also maintaining a Capital Conservation Buffer (CCB) which started with 0.625 percent from 2016 and ended up with 2.50 percent in December 2019. CCB of the banking industry stood at 1.08 percent at the end of September 2025. Besides, at individual level, 42 banks have fulfilled the CCB requirements by the period.
In order to avoid building-up excessive on and off-balance sheet leverage in the banking system, BB has introduced the minimum requirement of leverage ratio as 3.25 percent in 2025 and it will be 4.00 percent at the end of 2026. This ratio of the banking industry already stood at 4.51 percent at the end of September 2025, whereas at individual level, 51 banks have fulfilled the minimum requirements.
Loan Classification
At the beginning of the FY13, BB reformed the loan classification and provisioning policy to align with the international best practice. However, due to the COVID-19 pandemic situation, economic and business environment got worse. With a view to facilitating the existing business environment and aligning with the macroeconomic cycle, some relaxations were brought in the objective criteria of loan classification policy declared in 2012. To combat the negative impacts of COVID-19 and to facilitate the borrowers through ease of repayments, BRPD issued several directives regarding loan classification and provisioning from time to time in order to facilitate the local as well as international trade and commerce. Lastly, in June 2025.
Banking Sector Performance, Regulation and Bank Supervision instalment size is being increased progressively as part of the soft repayment facility. While formulating the policy, sector specific and category-wise considerations such as CMSMEs, agricultural sector, large loans etc. as well as current international and local economic conditions due to the COVID-19, political unrest pertaining to war, flood hazard in Bangladesh, etc. have been taken under consideration.
CAMELS Rating
The CAMELS rating system continues to be the most important supervisory tool for evaluation of banks’ overall health. However, BB is continuously adopting international regulations and best practices on bank supervision and continues its quest for developing more effective supervisory tools to uplift and ensure a sound and stable performance of the banks. In accordance with the international best practices, BB is preparing to move from the rule-based, compliance-oriented bank supervision to a principle-based, forward looking supervisory framework. BB with technical assistance from the IMF is working to implement the risk-based supervision (RBS), a supervisory approach which stresses that the supervisor should assess risk profiles of banks in terms of the risks they run, efficacy of their risk management framework, and risks they pose to the banking and financial systems as well as the supervisory objectives. Moving beyond the passive assessment of compliance with rules, once RBS is implemented BB would be able to allocate its supervisory resources to the banks and risks areas which need more attention. To this end, a high-powered RBS advisory committee chaired by the Deputy Governor in charge of DOS has been formed which will lead the overall RBS implementation effort in BB. Moreover, in addition to the risk matrix and risk rating tools used in RBS, the current CAMELS rating system will be replaced by a forward-looking CAMELS rating system as one of the supervisory tools under RBS.
On-site Supervision of Banks
Under the continuous supervision/ surveillance system, the overall financial condition of the banks operating in Bangladesh is monitored throughout the year on the basis of periodic onsite inspections conducted by the concerned departments of BB. As part of statutory function, currently ten departments of BB namely Department of Banking Inspection.
These ten departments conduct onsite inspection on SCBs, SBs, PCBs (including banks operating under Islamic Shariah), FCBs and other financial institutions including Investment Corporation of Bangladesh (ICB) and money changers. These departments conduct different types of inspections, which may be summarised into Banking Sector Performance.
Three major categories like (i) comprehensive/ regular/traditional inspection (ii) core risks evaluation and (iii) special/surprise inspection.
The overall performance of the banks (such as capital adequacy, asset quality, liquidity, earnings, management competence, etc.) is evaluated in a comprehensive inspection and banks are rated from "1" to "5" scale in ascending order based on the evaluation. The onsite inspection departments also monitor the compliance of the suggestions or recommendations made in the inspection reports. Inspection is also conducted to examine the compliance of the core risk management guidelines on asset liability management, credit/investment risk management, internal control and compliance, and information systems security issued by BB. Special/surprise inspections are conducted for specific purposes or to investigate complaints received from the banks’ customers. During FY25, BB’s eight departments of banking inspection conducted a total number of 2384 onsite inspections on various banks under their jurisdiction where total number of comprehensive inspections and special inspections were 1590 and 349 respectively. A number of head offices of the local banks and country offices of the foreign commercial banks were also taken under the core risk evaluation process in FY25. Moreover, BB’s inspection departments carried out a number of inspections to review the accuracy of the statement of internal capital adequacy assessment process (ICAAP) of banks. A summary of onsite supervision carried out by BB’s eight departments of banking inspection (DBI) is shown.
The Department of Foreign Exchange Inspection (DFEI) is also devoted to conduct on-site inspection on the issues related to foreign exchange transactions, foreign trade financing and foreign exchange risk management of banks. The inspection jurisdiction of this department covers the function of off-shore banking units, exchange houses and overseas branches/operations of local banks. This department also supervises foreign exchange transactions of money changers. The inspections of this department are carried out broadly in two dimensions--’regular’ and ‘special’ which are done by on-site inspection. But foreign exchange
A Summary of On-site Banking Inspections in FY25 Name of the departments Comprehensive inspections Special inspections Core Risk inspections SREUP and AML inspections Quick Banking Sector Performance, Regulation and Bank Supervision risk management inspection is done by on-site inspection only on those banks where speculative and/or derivative transactions has taken place in the inspection period and off-site supervision is done on the banks where speculative and/or derivative transaction is absent. The inspections of DFEI are segregated in following types: ‘comprehensive inspection on authorised dealer (AD) branches’, ‘FX risk management inspection’, ‘cash incentive inspection’, ‘comprehensive inspection on money changers’ and special inspection on authorised dealer (AD) branches, offshore banking units and money changers.
