Rupali Bank has accumulated Tk14,156 crore in non-performing loans (NPLs) among its 32 largest borrowers, most of whom received credit far beyond regulatory exposure limits under special approvals, according to documents reviewed by The Business Standard.

The records show that 47 clients were granted loans exceeding 10% of the bank's regulatory capital, classifying them as "large borrowers" under central bank rules. Of these, just 32 borrowers now account for nearly 63% of the bank's total funded loans, with individual exposures surpassing 25% of capital – the ceiling designed to curb concentration risk.

Kazi Md Wahidul Islam, managing director of Rupali Bank, said the bulk of the problematic loans had been approved before he assumed office. He said recovery efforts have since been stepped up, with lawsuits filed against several borrowers and rescheduling pursued for others in line with their repayment capacity and policy provisions.

Asked why lending beyond the 25% exposure cap was permitted, he said: "Special circumstances necessitated such approvals in certain cases."

Bankers and analysts say weak transparency, political influence, and regulatory forbearance allowed large borrowers to secure excessive credit from state-owned banks, particularly during periods of systemic stress when supervision was relaxed.

Exposure limits and large borrowers

Under Bangladesh Bank's large loan policy, a bank's total exposure to a single borrower or group must not exceed 25% of its eligible capital. If the limit is breached, new lending must stop, and a risk-reduction plan must be implemented within a specified timeframe. 

Loans exceeding 10% of regulatory capital classify a borrower as "large" though banks may lend up to 25% under the policy.

By December 2024, only 18 Rupali Bank clients had received loans beyond capital limits under special approvals, with the top 16 defaulters owing Tk7,660 crore.

Bangladesh Bank spokesperson Arif Hossain Khan said single-borrower limits exist to prevent excessive risk concentration and protect banks from collapse.

He added that some borrowers failed to settle non-funded liabilities, such as letters of credit, forcing banks to convert them into funded loans, inflating exposure.

"Political intervention played a role in large loans, particularly those linked to major conglomerates," he said. He cited the S Alam Group's case, where approvals were granted to avoid shortages of essential commodities, and Beximco's, where loans were cleared citing employment risks and labour unrest.

Second in defaults among state banks

Rupali Bank, formed in 1972 through the merger of Muslim Commercial Bank, Australasia Bank and Standard Bank, was profitable for decades but has recently come under mounting financial strain.

Among the four state-owned commercial banks, it now has the second-highest default rate after Janata Bank. By the end of September, defaulted loans stood at 20% at Sonali Bank, 40% at Agrani Bank, 70% at Janata Bank and 51% at Rupali Bank. 

Despite the rising defaults, Rupali remained profitable last year, alongside Sonali Bank, while Janata and Agrani recorded heavy losses. Rupali posted a net profit of Tk8 crore, compared with Tk866 crore at Sonali Bank, while Janata and Agrani reported losses of Tk3,071 crore and Tk937 crore respectively.

Listed on the stock market since 1986, Rupali Bank posted net profits of Tk21 crore in 2022 and Tk54 crore in 2023. Central bank data show that Rupali's defaulted loans stood at Tk5,273 crore in 2021, representing 14.9% of total loans. That figure rose to Tk6,630 crore in 2022, or 15.5% of outstanding credit, before accelerating sharply over the past two years.

Defaults and capital position

By June 2025, Rupali Bank's defaulted loans had surged to Tk22,180 crore, or 44% of total loans. By September, the ratio climbed to 51% at Tk23,712 crore,, up from 21% in December 2023. 

Central bank data show the top 20 defaulters alone account for Tk12,263 crore, or 55% of total defaulted loans. By June, the bank had recovered only Tk90 crore from these borrowers, meeting just 17% of its recovery target.

At the end of June, Rupali Bank's required capital stood at Tk9,882 crore, while maintained capital was negative Tk13,657 crore. The resulting capital shortfall reached Tk23,240 crore, alongside Tk15,542 crore in provisioning deferrals from the central bank.

Top 11 defaulters

Among Rupali Bank's largest defaulters are Blue Planet Group with Tk1,049 crore, Beximco Limited with Tk990 crore, Bangladesh Sugar and Food Industries Corporation with Tk900 crore, Crony Apparels with Tk850 crore and Jute Textile Mills owing Tk720 crore.

Other major defaulters include MSA Textile Limited with Tk580 crore, Unitex Group with Tk670 crore, Nurjahan Group with Tk630 crore, AA Knit Spin with Tk640 crore, Madaripur Spinning with Tk620 crore and Dolly Construction with Tk505 crore.

Defaults concentrate in five branches

Rupali's top five branches account for Tk15,394 crore, or 55.37% of total loans. The Local Office branch alone holds more than 36% of total lending, despite the bank operating 586 branches nationwide.

Arfan Ali, former managing director at Bank Asia, said deliberately defaulting clients usually avoid multiple branches, withdrawing loans from a select few. These clients often use political influence to control the board and management, concentrating loans in specific branches. 

He added that in some branches, loan volumes far exceed deposits. In such cases, the branch obtains funds from other branches through interbank transfers to meet borrower demands, effectively creating opportunities for misappropriation.

In 2025, Rupali Bank earned Tk1,732 crore in interest income against Tk2,320 crore in interest expenses, resulting in negative net interest income of Tk597 crore. Its return on assets and return on equity stood at 0.01% and 0.5% respectively, underscoring the depth of its financial stress.

Rupali Bank