Imagine a bank on the brink: Rupali Bank's gamble with massive loans to just 32 elite clients has spiraled into a staggering Tk14,156 crore in unpaid debts, shaking the foundations of one of Bangladesh's oldest financial institutions. This isn't just a story of poor financial choices—it's a deep dive into how risky lending, special permissions, and external pressures can turn a once-profitable bank into a cautionary tale. Stick around, because we're about to unpack the details, including some eyebrow-raising decisions that could make you question the very rules of banking. And this is the part most people miss: how political strings and relaxed oversight might have fueled it all.
Let's break it down step by step, starting with the core facts. According to documents examined by The Business Standard, Rupali Bank has racked up a massive Tk14,156 crore in non-performing loans (NPLs)—that's loans where borrowers aren't making payments as agreed, often a sign of deeper financial trouble. These bad loans are tied to its 32 biggest clients, who were handed credit way beyond what the rules typically allow. For newcomers to finance, think of NPLs as the money a bank lent out that isn't coming back, which can hurt its ability to keep operating smoothly.
Diving deeper, records reveal that 47 borrowers got loans surpassing 10% of the bank's regulatory capital, marking them as 'large borrowers' under Bangladesh Bank's guidelines. Regulatory capital, in simple terms, is the financial cushion a bank must hold to absorb losses and stay stable—think of it as a safety net. Out of these, 32 now represent nearly 63% of the bank's total funded loans, with each exposure exceeding 25% of that capital. This cap is meant to prevent too much money from being concentrated on a few people, reducing the risk of a big collapse if things go wrong.
Rupali Bank's current managing director, Kazi Md Wahidul Islam, points out that most of these troubled loans were approved before he took the helm. He's emphasizing efforts to recover funds, including legal actions against some borrowers and restructuring repayment plans tailored to their financial situations and bank policies. When questioned about why loans went beyond the 25% exposure limit, he explained that unique situations called for these exceptions. But here's where it gets controversial—could these 'special circumstances' be a polite way of saying political favoritism or insider deals? It's a point that sparks heated debates among experts.
Industry insiders, including bankers and analysts, argue that a lack of clear transparency, political meddling, and lenient regulatory oversight enabled big borrowers to grab oversized loans from state-owned banks, especially during tough economic times when checks were loosened. This raises big questions: Should banks bend rules for political reasons, or does that undermine fair lending? For example, imagine if a powerful business group gets extra credit to keep essential goods flowing, like avoiding shortages in daily necessities—sounds helpful on the surface, but it might sideline smaller borrowers and risk the bank's health.
To understand the rules better, let's clarify Bangladesh Bank's large loan policy. Essentially, a bank's total lending to one borrower or their connected group can't go over 25% of its eligible capital. If it does, new loans must halt, and the bank has to create a plan to cut the risk within a set time. Borrowers getting over 10% of capital are labeled 'large,' but banks can stretch up to 25% under the rules. By December 2024, only 18 of Rupali's clients had loans breaching these limits via special approvals, with the top 16 bad payers owing Tk7,660 crore.
Bangladesh Bank spokesperson Arif Hossain Khan stresses that these limits are crucial to avoid piling too much risk in one place and shield banks from total failure. He notes that some borrowers couldn't pay off non-funded obligations, like letters of credit (which are promises to pay for imports), leading banks to turn them into funded loans and boost the exposure. 'Political intervention was a factor in big loans, especially for large groups,' he adds, pointing to cases like S Alam Group, where approvals prevented shortages in vital products, or Beximco, where loans were approved to avert job losses and worker protests. This is another spot where opinions clash: Is protecting jobs and supplies worth bending financial rules, or does it open the door to abuse?
Rupali Bank, established in 1972 from merging three older banks, enjoyed long-term profits until recent pressures mounted. Among Bangladesh's four state-owned commercial banks, it ranks second in default rates after Janata Bank. By September's end, defaults hit 20% at Sonali Bank, 40% at Agrani, 70% at Janata, and 51% at Rupali. Interestingly, despite climbing defaults, Rupali and Sonali stayed profitable last year, with Rupali netting Tk8 crore versus Sonali's Tk866 crore, while Janata and Agrani suffered losses of Tk3,071 crore and Tk937 crore.
As a publicly traded company since 1986, Rupali reported Tk21 crore in 2022 profits and Tk54 crore in 2023. Central bank figures show defaults ballooning from Tk5,273 crore (14.9% of loans) in 2021 to Tk6,630 crore (15.5%) in 2022, then soaring over the last two years. By June 2025, they reached Tk22,180 crore, or 44% of total loans, and by September, 51% at Tk23,712 crore, up from 21% in December 2023. The top 20 defaulters alone owe Tk12,263 crore, 55% of all bad loans, with only Tk90 crore recovered by June—barely 17% of the target.
On the capital front, by June's end, Rupali needed Tk9,882 crore but had a negative Tk13,657 crore on hand, creating a Tk23,240 crore shortfall plus Tk15,542 crore in deferred provisions from the central bank. This capital crunch is like running out of reserves in a crisis, making recovery even tougher.
Zooming in on the biggest culprits, Rupali's top 11 defaulters include Blue Planet Group at Tk1,049 crore, Beximco Limited at Tk990 crore, Bangladesh Sugar and Food Industries Corporation at Tk900 crore, Crony Apparels at Tk850 crore, and Jute Textile Mills at Tk720 crore. Others are MSA Textile Limited (Tk580 crore), Unitex Group (Tk670 crore), Nurjahan Group (Tk630 crore), AA Knit Spin (Tk640 crore), Madaripur Spinning (Tk620 crore), and Dolly Construction (Tk505 crore).
Defaults aren't spread evenly either—they're clustered in just five branches holding Tk15,394 crore, or 55.37% of total loans. The Local Office branch alone manages over 36% of lending, even with 586 branches nationwide. Former Bank Asia MD Arfan Ali explains that strategic defaulters often stick to a few branches to exert influence, possibly through political connections shaping boards and leadership. In some cases, branches lend more than their deposits, pulling funds from others via transfers, which can create chances for misuse.
Financially speaking, in 2025, Rupali earned Tk1,732 crore in interest income but paid out Tk2,320 crore in expenses, yielding a negative net interest income of Tk597 crore. Its return on assets and return on equity were just 0.01% and 0.5%, painting a vivid picture of severe financial strain.
So, what do you think? Should political pressures ever override banking regulations to support big businesses or prevent economic disruptions? Or does that set a dangerous precedent for favoritism? And is Rupali's recovery push enough, or do we need stricter oversight? Share your opinions in the comments—let's discuss the fine line between necessary flexibility and reckless risk.
