Economic Reporter
Janata Bank, one of Bangladesh’s largest state-owned lenders, is facing renewed criticism as it continues internal promotions despite mounting losses, soaring defaulted loans, and allegations of irregularities. Analysts and regulators warn that the bank’s recent promotion decisions reflect deeper governance failures rather than a path to recovery.
Like any commercial bank, Janata Bank’s primary source of income should be interest earned on loans. That mechanism, however, has effectively collapsed. More than 70 percent of the bank’s outstanding loans are now classified as non-performing, turning its loan portfolio into a liability rather than an asset. In 2025 alone, the bank reportedly incurred interest-related losses exceeding Tk 40 billion, pushing its operating loss for the year to around Tk 35.98 billion.
Although these figures are still subject to final audit, insiders estimate that once provisioning, capital shortfalls, and non-performing loans are fully accounted for, Janata Bank’s net loss could exceed Tk 50 billion. Defaulted loans may cross Tk 700 billion, while capital shortfall is expected to surpass Tk 660 billion—placing the bank in an extremely fragile position.
Despite this backdrop, Janata Bank’s management has moved ahead with a series of promotions. On December 7, the bank promoted 26 officials from assistant general manager (AGM) to deputy general manager (DGM). The move has sparked controversy, with allegations that bribes ranging from Tk 2–3 million per officer were exchanged during the promotion process. Written complaints have reportedly been submitted to the Anti-Corruption Commission.
Sources within the banking sector claim that as opportunities for illicit gains from loan approvals have narrowed, certain senior officials have shifted focus toward promotions and transfers as alternative channels for rent-seeking. This has further eroded staff morale and public confidence in the institution.
Janata Bank Managing Director Md Mojibur Rahman has rejected the bribery allegations, stating that promotions were conducted through a transparent process and overseen by representatives from the Ministry of Finance and Bangladesh Bank. He acknowledged the bank’s dire financial condition but argued that timely management decisions helped contain losses that were previously projected to exceed Tk 50 billion in 2025.
Regulators, however, remain unconvinced. Bangladesh Bank spokesperson and executive director Arif Hossain Khan questioned the logic of promotions at a time when the bank is struggling for survival. He noted that promotions usually follow business expansion and profitability, neither of which applies to Janata Bank’s current situation. Instead, he emphasized the need for cost-cutting and operational discipline.
Financial experts also point out that Janata Bank’s strategy of aggressively collecting high-interest deposits to stay afloat is creating long-term risks. Over the past 18 months, the bank has raised nearly Tk 300 billion in deposits, more than half of which carry high interest rates of 10–12 percent. These funds are reportedly being used not to generate profit, but to pay salaries and operating expenses—an unsustainable practice that deepens future liabilities.
Employee compensation costs continue to rise despite losses. Salary and benefits expenses increased from Tk 13.68 billion in 2024 to over Tk 15 billion in 2025. Promotions at multiple levels have added to these costs, further straining the bank’s finances.
The roots of Janata Bank’s crisis date back to 2009, when political influence began to dominate board appointments, management decisions, promotions, and loan approvals. During this period, large corporate groups obtained massive loans—many of which later defaulted. Today, loans amounting to more than Tk 600 billion taken by major conglomerates remain unpaid.
Economists argue that internal promotions in such a distressed institution send the wrong signal. According to CPD Executive Director Dr Fahmida Khatun, repeatedly injecting public funds into state-owned banks without fixing governance failures is no longer justifiable. She warned that when more than 70 percent of a bank’s loans turn bad, keeping it afloat through promotions and budgetary support makes little economic sense.
While Janata Bank’s management insists it is working to restore governance and stability, critics say that prioritizing promotions over recovery measures—such as loan recovery, asset auctions, and structural reform—highlights misplaced priorities. In the absence of deep institutional reform, they argue, promotion-driven management decisions may only accelerate the bank’s decline rather than secure its future.
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