Key takeaways:

• NPL ratio: 36-37% (nearly TK 37 taka lost per TK 100 loaned)
• Total NPLs: Over 6.5 lakh crore taka (September end)
• Individual bank NPL ratios: 92-97% in worst cases
• Five weak banks merging into one

Bangladesh Bank will grant final approval for Consolidated Islamic Bank PLC on Sunday, marking a crucial step in rescuing five struggling banks drowning in bad loans that have pushed the country's non-performing loan ratio past 37%.

Ahsan H. Mansur, governor, Bangladesh Bank announced at an economic conference at Hotel Sonargaon on Saturday that a special board meeting will formalise the merger structure. Five weak banks will combine into one new entity to address widespread mismanagement and irregularities plaguing the sector.

Total non-performing loans nationwide crossed TK 6.5 lakh crore by September's end. Some banks reported alarming NPL ratios reaching 92%-97%. For every 100 taka disbursed, nearly TK 37 never returns, choking economic circulation and investment opportunities.

Government promised TK 20 thousand crore support for the new bank, with TK 10 thousand crore to be deposited immediately after approval. This fund will help return depositors' money, addressing widespread concerns about frozen accounts. Governor assured no layoffs for qualified, active employees and prioritised depositor safety.

Once the new bank opens a current account with Bangladesh Bank and receives the initial capital injection, management will begin returning deposits. Deposit Insurance Scheme will cover significant portions of guaranteed funds.

Business leaders at Saturday's conference raised concerns about energy shortages, high interest rates, and investment uncertainty. Governor clarified that whilst import bill values decreased, actual import volumes remained stable, suggesting money laundering through inflated bills has declined.

However, the massive NPL burden damages Bangladesh's international banking reputation. Foreign banks perceive systems with 37-plus per cent defaults as high-risk, leading to increased commissions and stricter conditions on letters of credit and foreign transactions. Experts warn this credibility crisis could hamper global trade partnerships and slow down international banking operations.