Asia’s ‘weakest’ link: Yunus on a tightrope as Bangladesh tries to fix banks without breaking economy

New Delhi: Just a few years ago, Bangladesh was touted as one of the fastest-growing economies in Asia. Economists hailed its transformation from a “basket case” to one of the region’s surprise success stories. Even during the growth years, though, the nation’s banking system was seen as its Achilles heel.

Today, persistently high inflation, tight liquidity conditions, weak governance and high non-performing loans burden the nation’s economy, with experts blaming bad loans during Sheikh Hasina’s term and poor financial management during economist Mohammad Yunus’s rule as the key factors.

By December 2024, Bangladesh recorded the “weakest banking system in Asia”—20.2 percent (Tk 3,45,765 crore) of total loans were in default—the highest in the region, according to the Asian Development