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Non-Performing Loan and its Impact on the Banking Sector of Bangladesh
| International Journal of Applied Information Systems |
| Foundation of Computer Science (FCS), NY, USA |
| Volume 12 - Number 46 |
| Year of Publication: 2025 |
| Authors: Murshida Khatun, Tariqul Islam, Mehidi Hasan Suvo, Jubair Bin Sharif, Md. Kwosar |
10.5120/ijais2025452003
|
Murshida Khatun, Tariqul Islam, Mehidi Hasan Suvo, Jubair Bin Sharif, Md. Kwosar . Non-Performing Loan and its Impact on the Banking Sector of Bangladesh. International Journal of Applied Information Systems. 12, 46 ( Feb 2025), 39-43. DOI=10.5120/ijais2025452003
Abstract
Non-Performing Loans or NPLs have become a major risk factor for sustainable growth and healthy profit margins for the banking industry of Bangladesh. Another cost of loans is Non-Performing Loans (NPLs) which are given when borrowers are unable to repay back the loan amount to the banks. For this purpose, this paper aims at facilitating an analysis of sectors that led to elevated non-performing loan ratios in Bangladesh based on; economic crises, bad credit risk assessment, and poor corporate governance. The effect of NPLs on the banking sector is explored in terms of decreased profits, deteriorated asset quality, as well as elevated production costs. To overcome these negative impacts, this paper recommends the following: Credit policies; more strict credit evaluation procedures, proper loan repayment methods, and sound credit-risk management. Thus, by managing the sources that contribute to the NPLs and implementing preventive measures the banking sector of Bangladesh shall have improved conditions for development and the state’s economic boost.
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