Non-Performing Loan and its impact on the banking sector of Bangladesh

Non-Performing Loans or NPLs have become a major risk factor for sustainable growth and healthy profit margins for the banking industry of Bangladesh.Another cost of loans is Non-Performing Loans (NPLs) which are given when borrowers are unable to repay back the loan amount to the banks.For this purpose, this paper aims at facilitating an analysis of sectors that led to elevated non-performing loan ratios in Bangladesh based on; economic crises, bad credit risk assessment, and poor corporate governance.The effect of NPLs on the banking sector is explored in terms of decreased profits, deteriorated asset quality, as well as elevated production costs.To overcome these negative impacts, this paper recommends the following: Credit policies; more strict credit evaluation procedures, proper loan repayment methods, and sound credit-risk management.Thus, by managing the sources that contribute to the NPLs and implementing preventive measures the banking sector of Bangladesh shall have improved conditions for development and the state's economic boost.