A household in which expenses exceed income is inevitably forced into debt. A country is no different—only larger in population and territory. Mahathir Mohamad once said that any nation that lags in finance, education, culture, or technology will inevitably fall under the influence of a more advanced country. Bangladesh’s rising debt is rooted in an abnormal level of defaulted loans. A defaulted loan is one taken from a bank but not repaid. When a bank realizes that the borrower will not repay, cannot be located, or—even if found—cannot be compelled to pay, the borrower is listed as a loan defaulter. In essence, a loan defaulter is treated as an offender.
A group of influential individuals, in collusion with dishonest bank officials, take large sums in the name of establishing industries. Members of bank boards also take loans under different names, fail to set up the promised industries, and instead siphon funds abroad. The S. Alam Group is one such example. Before loan disbursement, they showed inflated valuations of mortgaged properties, sometimes even properties that existed only on paper.
The Hall-Mark scandal of 2012 marked the beginning of large-scale looting of bank funds. Tanvir Mahmud, the MD of Hall-Mark Group, colluded with his brother-in-law, who was the manager of Sonali Bank’s Hotel Sheraton branch, to acquire around Tk4,500 crore. Later, it was found that most of the mortgage documents were fake. Cases were filed, and Tanvir Mahmud, his wife, the bank manager, and nine others were sentenced to life imprisonment. A few days ago, Tanvir Mahmud died in prison. Their sentences were executed, but the money was never recovered (the then finance minister AMA Muhith had said, “Tk5,000 crore is nothing”).
By the end of 2024, defaulted loans amounted to Tk2,11,000 crore. By 2025, that figure soared to Tk6,50,000 crore. Currently, 36% of loans are unrecoverable. Per capita debt stands at around Tk40,000—meaning each citizen, in effect, owes that amount. Bangladesh now has the highest rate of loan default in the world.
Then comes the trade deficit—when import expenses exceed export earnings. Bangladesh’s largest trade deficit is with China. Last year, the country imported goods worth US$20.61 billion from China, while exports amounted to US$19.87 billion. Overall, the trade deficit increased by 23%. In bilateral trade globally, 122 countries lead while 104 lag—Bangladesh is among those lagging.
In the United States, while loan defaults exist, money cannot be laundered abroad; however, their trade deficit remains. Thus, US foreign policy consistently revolves around disputes over imports and exports.
Do entrepreneurs in the developed world take bank loans? The answer is no. In an ideal capitalist system, the stock market is the major source of capital for industrialists. They raise funds there, and shareholders feel a sense of ownership in the industries. Though stock markets are risky, they operate with transparency—there is collapse, but not corruption. In contrast, Bangladesh’s banking system is so flawed that bank officials themselves teach defaulters how to remove their names from the list.
I personally observed an incident: An industrialist, who had taken Tk200 crore and gone bankrupt, was advised by his bank to submit an application claiming that his profits were pending, requesting Tk50 crore in new loans to keep the industry running, along with a waiver of interest. Eventually, through collusion, he received the loan, repaid part of the installment, and had Tk12 crore of interest waived—meaning the state and its people lost Tk274 crore. Meanwhile, the farmers who feed the nation face countless obstacles when trying to secure loans.
The Chief Adviser’s Information Secretary recently said, “Earlier money was smuggled in sacks; now it is smuggled with a switch.” Politicians say many grand things, but have yet to demonstrate how they will make the country self-reliant, build a dignified nation, improve education, or cultivate a sense of shared ownership among citizens.
Writer: Researcher on Democratization and Democratic Local Governance
