TDS Desk:

The main source of revenue for any bank is the interest earned on its disbursed loans. This income funds everything from salaries to operating costs. At state-owned Janata Bank, however, its loans have become a liability rather than an asset. Over 70 percent of its credit is now classified as non-performing. For the recently concluded year, the bank posted a loss exceeding BDT 40 billion from interest alone, driving an annual operating deficit of BDT 35.98 billion.

These figures remain provisional. A final net-loss assessment will emerge only after the audit establishes the precise amounts of non-performing loans, provisions, and capital shortfalls. Current estimates suggest the audited loss could surpass BDT 50 billion. Meanwhile, bad loans are expected to exceed BDT 700 billion, with the capital gap likely to breach BDT 660 billion.

To weather the crisis, Janata Bank’s management has aggressively sought high-interest deposits. It has raised roughly BDT 300 billion in new deposits over the past 18 months, largely through rates of 10–12 percent. Analysts caution this strategy carries a long-term risk: according to the bank’s own data, 55 percent of total deposits now bear this costly burden. Janata Bank is relying on fresh deposits — not earnings — to cover payroll and other expenses.

Despite the turmoil, good governance has yet to return. On December 7, the bank promoted 26 officers to deputy general manager in a rush. Allegations have emerged that bribes of BDT 2–3 million per officer were paid for these promotions from assistant general manager ranks, prompting a formal complaint to the Anti-Corruption Commission. Sources suggest that with fewer opportunities for graft in loan approvals, senior officials are now seeking illicit gains through promotions and transfers.

Janata Bank’s managing director, Md Mazibur Rahman, acknowledged the bank’s fragile finances but denied bribery claims. He took office on November 7, 2024, following the student-led mass uprising. Speaking to journalists, he said, “For a bank with 70 percent of its loans gone bad, turning a profit is a Herculean task. Last year, the operating loss was feared to exceed BDT 50 billion, but timely decisions contained it around BDT 35 billion.” Noting that Basic Bank, which faced a crisis in 2012, has still not recovered, he said Janata Bank’s recovery will also take time.

State-owned Janata Bank’s decline began in 2009. Following the return of Sheikh Hasina’s Awami League government, its board was filled with political loyalists, a pattern repeated across several other banks. Decisions on appointing managing directors, loan disbursements, and staff promotions all became politicised. During this period, Janata was plundered more extensively than any other state-owned bank. Major conglomerates including Beximco, S Alam, AnonTex, and Crescent took loans exceeding BDT 600 billion, now at the core of its non-performing portfolio.

A review of the bank’s accounts shows an operating loss of BDT 21.85 billion in 2024, driven by a BDT 34.2 billion shortfall in income from interests. The situation worsened in 2025, with the operating deficit rising to BDT 35.98 billion. Despite the massive interest income gap, the bank earned BDT 23.86 billion from non-interest sources last year, including investments in bills and bonds, as well as fees and commissions. After provisions and taxes in 2024, the net loss stood at BDT 30.66 billion. Sources suggest the 2025 net loss could reach BDT 50 billion.

Even amid these heavy losses, salary expenditure continues to climb. The bank spent BDT 13.68 billion on wages in 2024. The figure rose above BDT 15 billion in 2025. Promotions across multiple tiers have contributed to this increase, a process now clouded by bribery allegations.

Asked about the claims, Janata Bank’s managing director said, “Promotions from AGM to DGM were conducted through an extremely transparent process. Representatives from the finance ministry and Bangladesh Bank were also involved. Only 26 out of 120 candidates were promoted.”

He added, “Since joining, I have taken initiatives to restore good governance. Some officers had been in the same department for years; I have transferred those who, according to policy, had completed three years in one office.”

Amid discontent and corruption allegations, the bank has transferred several officials, including the deputy managing director responsible for human resources. Questioned about promotions and bribery claims at a bank in crisis, Bangladesh Bank’s executive director and spokesperson, Arif Hossain Khan, said, “Promotions are needed when a business is doing well and expanding. But in Janata Bank’s situation, they are meaningless. The current priority should be cutting costs. What is the benefit of promoting staff who cannot prevent the bank’s losses?”

He added that any bank in Janata’s position would struggle to recover. “When in financial distress, any bank will collect high-interest deposits in a struggle to survive. This brings some short-term relief, but the long-term outcome is not favourable,” Khan noted. “The way out of Janata’s predicament is through loan recovery, rescheduling, and auctioning collateral property.”

While not on Janata Bank’s scale, state-owned Basic Bank was similarly plundered after 2009. Around BDT 40 billion in loans was siphoned off through accounts held by anonymous companies. The board, led by Sheikh Abdul Hye Bacchu — a close associate of the then-Prime Minister Sheikh Hasina’s family — oversaw the looting. The bank has never recovered from that BDT 40 billion loss; its condition has worsened over the past decade. Between 2013 and 2024, Basic Bank recorded a cumulative net loss of BDT 55.13 billion. Nearly 60 percent of its distributed loans, worth roughly BDT 80 billion, remain non-performing. Despite a BDT 33.9 billion capital injection from the government, the bank still faces a capital shortfall exceeding BDT 30 billion.

Other state-owned lenders, Agrani and Rupali Bank, are also in poor condition, though less severely than Basic. Only Sonali Bank maintains a relatively stronger position. Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank (RAKUB), both government-owned specialised banks, are similarly distressed, operating with capital deficits.

Under these circumstances, continuing to support state banks with public funds is no longer sustainable, says Dr. Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD). “For years, the government has been keeping these banks afloat through taxpayer money,” she told journalists. “The damage caused by governance failures and corruption at Janata and other banks is unacceptable. When over 70 percent of a bank’s loans turn bad, keeping it on life support makes no sense.”

Dr. Khatun, who also sits on the board of Bangladesh Bank, futher said, “The situation at Janata and many other banks is now dire. But the question is: how many can the government afford to keep alive through capital injection? A tough decision must be made regarding these weakened institutions. State-owned banks are overstaffed yet lack sufficient expertise. Effective governance within these banks is entirely absent.”