Dhaka, March 17 -- Non-bank financial institutions (NBFIs) are grappling with a surge in defaulted loans awaiting court settlements. Central bank data shows a rise of more than 37 per cent in just three months, prompting concerns from economists about lax lending and recovery practices.

In December 2022, a staggering Tk115.52 billion of NBFIs' funds remained stuck in loan defaults managed by the money loan courts. This figure swelled to Tk 158.77 billion in March 2023 -- roughly half the construction cost of the Padma Bridge.

The crisis did not accumulate overnight.

Industry insiders acknowledge that poor governance and limited capacity within NBFIs have contributed to the problem.

These shortcomings lead to inadequate loan assessment...