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conduct,” he added. “Why did we end up with NPLs at this level? Let us create a taxonomy. I would love to see some research on the different ways NPLs accumulated.”

Zaidi Sattar, chairman of PRI and chair of the event, said the recent rise in non-performing loans (NPLs) to nearly 35 percent is unprecedented and requires careful analysis.

“In advanced economies, we talk about institutions being ‘too big to fail’. In Bangladesh, many distressed banks are instead ‘too toxic to fail’, because letting them collapse would trigger severe contagion across the economy,” Sattar said.

He added that Bangladesh’s unique environment demands its own framework for resolving banking sector problems.

ECONOMIC IMPACT OF HIGH NPLs

Mohammad Akhtar Hossain, chief economist at Bangladesh Bank and a special guest, highlighted the broader economic impact. “Our FDI-to-GDP ratio is already very low, and the combination of high NPLs and ongoing political uncertainty is making it extremely difficult to attract foreign direct investment,” he said.

Tanjil Chowdhury, chairman of Prime Bank, stressed that wilful defaulters should not be allowed back into the economy.

“They should not receive any fresh financing. The 2 percent shareholding requirement for becoming a director should be abolished and replaced with a cap on family shareholding,” he said.

Mashrur Arefin, chairman of the Association of Bankers Bangladesh (ABB) and managing director of City Bank, said no bank in Bangladesh should be allowed to fail.

“The initiative to merge the five banks is appropriate. As the economy grows, it needs more banks. Many banks that once struggled are now strong institutions. City Bank is one such example. Bismillah Group had badly affected Prime Bank, yet the bank is on track to make Tk 1,000 crore in profit this year,” he said.

Ahmed Rashid Joy, deputy managing director of BRAC Bank, highlighted the importance of clarity in restructuring plans.

“The success will depend on what percentage of customers will get their money back and what percentage will receive shares,” he said. Mohammad Zahir Hussain, executive director of the Bank Resolution Department at Bangladesh Bank, also spoke at the discussion.