The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
International Monetary Fund. Asia and Pacific Dept
INTERNATIONAL MONETARY FUND
This Selected Issues paper analyzes the performance of state-owned commercial banks (SOCBs) in Bangladesh. Bangladesh's experience with SOCBs is not unique: SOCBs have been underperforming private banks and foreign-owned banks. High levels of nonperforming loans (NPLs) imply that a large amount of savings is wasted on financing loss-making activities and is unavailable for financing productive investments. High NPL levels and the need for provisions also increase the cost of credit to good borrowers, further dampening investment and growth. Bold steps are required to resolve SOCBs' weak performance, reflecting empirical evidence and mixed results from the previous efforts.