Dhaka, Aug. 20 -- Higher classified loans have dragged the capital adequacy of Bangladesh's banking sector to the lowest level among neighbouring South Asian countries, officials said.

The capital-to-risk-weighted-asset ratio (CRAR) fell drastically to 3.08 percent in 2024, driven largely by weak capital positions in state-owned commercial banks (SoCBs), specialized development banks (SDBs), and Islamic private commercial banks (PCBs), according to the Financial Stability Report (FSR) 2024 released Monday by the Bangladesh Bank (BB).

"The banking sector faced heightened stress in 2024, particularly regarding capital adequacy," the central bank said in its latest FSR.

The banking industry's CRAR decreased by 8.56-percentage points to 3....