Debt in Bangladesh

The term debt or loan (ঋণ) is used in everyday life for both loans and debts. According to HIES 2022, 37.03% of households took credit during the previous twelve months from financial or non-financial institutions, friends, moneylenders, or other sources; the figure was 39.35% in rural areas and 32.11% in urban areas. End-report table 12.11A states that average borrowing was BDT 73,980 per household. Common purposes included business expenses, housing, food purchases, agriculture, health, marriage, and education. Among the lenders recorded for borrowers were ASA, other NGOs, BRAC, and Grameen Bank. Banks and financial companies normally check identity, income or cash flow, existing liabilities, and, depending on the product, collateral or a guarantor. At participating institutions, Credit Information Bureau data, abbreviated as CIB, are included in credit assessment. Approval does not follow automatically. Before signing, compare total repayment, the interest rate or service-charge method, installment frequency, term, grace period, collateral, guarantee, and consequences of default. Microcredit (ক্ষুদ্রঋণ) is offered by NGO microfinance organizations and, in some cases, through group or membership models. NGO MFIs need certification from the Microcredit Regulatory Authority, abbreviated as MRA, to conduct regulated microfinance business; the license can be checked through MRA and MFI e-Verification. Official MRA guidance mentions, among other things, a 24% service charge on the declining balance, a 15-day grace period, 46 installments, a maximum of BDT 25 for the admission fee, passbook, and loan form, and 6% savings interest. These figures and the weekly installment rule do not apply universally to every product; seasonal or one-time repayments are set out in the relevant contract. Several MFI loans running at the same time can make repayment more difficult. After disasters, special moratoria, disaster loans, or support may be available. Informal loans may come, for example, from Mahajans or other moneylenders, friends, relatives, employers, landlords, suppliers, and grocery shops. These arrangements are not supervised by CIB, MRA, or Bangladesh Bank. Terms, collateral, installments, and enforcement depend on the individual case; as a result, comparability and legal certainty are often lower than with a written contract from a regulated provider. Bangladesh Bank supervises banks and financial companies, operates CIB, and handles complaints through its Consumer and Investor Protection Centre, abbreviated as CIPC. For banks and financial companies, Bangladesh Bank classifies loans objectively under BRPD Circular 15/2024 from 1 April 2025: Sub-standard applies after three to less than six months of overdue status, Doubtful after six to less than twelve months, and Bad or Loss after twelve months. A general provision of 1% applies to standard loans, 5% to SMA loans, and specific rates of 20%, 50%, and 100% apply to SS, DF, and BL. A 2025 letter provides for a 0.5% provision until 31 December 2026 for certain unclassified short-term agricultural loans and CMS loans. This classification concerns the institution’s treatment of the loan and does not extinguish the debt. Rescheduling or extending repayment is a decision of the lender and not an automatic entitlement. The lender may examine, among other things, the actual need, repayment capacity, cash flow, audited statements, total liabilities, and an on-site inspection. Habitual defaults, forgery, fraud, other irregularities, and misuse of funds may exclude rescheduling. Classified loans can generally be rescheduled no more than three times; a fourth time requires special examination under the 2022 regulation. For short-term agricultural, cottage, and microcredit loans, maximum terms may be three years for the first rescheduling and two years and six months for later rescheduling, depending on the repetition. A new credit facility after rescheduling generally requires payment of 3% of the settlement amount; exporters have a documented exception of 2%. A borrower should first have incorrect or outdated CIB data corrected by the reporting bank or financial company. A negative CIB entry may lead to an indication of default, and a write-off does not automatically erase liability. For unresolved complaints, the route leads from the branch or responsible office through the lender’s complaint cell to Bangladesh Bank’s CIPC; it can be reached at 16236, by email, online, or in writing. CIPC does not handle matters outside its jurisdiction, anonymous or unsigned submissions, third-party complaints, or proceedings already pending before a court. Financial institutions may sue for outstanding loans before the debt recovery court (Artha Rin Adalat). For pledged or lien-encumbered collateral, the institution must generally exercise the legally permitted right of sale before filing suit and credit the proceeds. The court may issue a default judgment; setting it aside is subject to a 30-day deadline and generally requires depositing 10% of the adjudicated amount. Court mediation or other alternative dispute resolution may be available under the applicable rules. Proceedings take different amounts of time depending on the case. The Bankruptcy Act 1997 provides for Bankruptcy Courts in Bangladesh, applications by creditors or debtors, a receiver, distribution of assets, discharge mechanisms, and appeals. The deadline for an appeal is 60 days and the deadline for a review is 30 days. Bankruptcy proceedings do not automatically result in a complete discharge of private consumer debts and should be reviewed by a qualified lawyer. Applicants who are needy and financially insolvent may, subject to the statutory criteria, contact the National Legal Aid Services Organization and the District Legal Aid Committees. After repayment, settlement, or an approved arrangement, written agreement, payment receipts, release of collateral, and updating of CIB data should be checked. Private indebtedness must be distinguished from public debt: at the end of December 2025, Bangladesh’s total external debt was USD 113.52 billion, of which 82.33% was public and 17.67% private. Government guarantees of BDT 106,973 crore as of 31 December 2025 are contingent liabilities and not an additional debt stock.