18 banks at risk due to potential loan defaults by top 3 borrowers: BB

18 banks at risk due to potential loan defaults by top 3 borrowers: BB

A report from Bangladesh Bank has revealed that the financial stability of 18 banks is at risk due to potential loan defaults by their top three borrowers. The inability of these borrowers to repay their loans could trigger a dangerous liquidity crisis for these banks, the report warns.
“If the top three borrowers default, 18 banks will fail to maintain the minimum cash reserve. These banks are already grappling with capital deficits against their risk-based assets,” the central bank said.
Analysts emphasize that a bank financial strength is primarily measured by its capital reserves. A capital deficit not only signals poor asset quality but also categorizes these banks as financially weak. The Bangladesh Bank report underscores that the banking sector is already burdened by defaulted loans, putting additional pressure on the system.