Janata Bank Faces Backlash Over Promotions as Losses and Defaults Mount

Dhaka, Jan 13, 2026:

Janata Bank is once again under scrutiny after moving ahead with a round of senior-level promotions at a time when the state-owned lender is struggling with heavy financial losses, widespread loan defaults, and persistent governance concerns. Observers say the promotion decisions highlight structural weaknesses rather than progress toward recovery.

For any bank, interest earned from loans is the core source of revenue. At Janata Bank, however, that foundation has largely collapsed. More than two-thirds of its total loans have turned non-performing, severely undermining income generation. During 2025, the bank reportedly suffered interest-related losses exceeding Tk 40 billion, resulting in an operating loss of nearly Tk 36 billion by year-end.

These figures remain provisional, pending audit completion. Banking insiders warn that once final calculations of provisioning, accumulated losses, and capital erosion are completed, Janata Bank’s net loss may cross Tk 50 billion. Defaulted loans are expected to exceed Tk 700 billion, while capital shortfall could rise beyond Tk 660 billion, placing the bank under extreme financial stress.

Against this backdrop, the bank promoted 26 officials from assistant general manager to deputy general manager on December 7. The move has generated controversy, with allegations that significant bribes were paid in exchange for promotions. Complaints regarding the matter have reportedly been filed with the Anti-Corruption Commission.

Industry sources suggest that as tighter oversight has reduced opportunities for irregular gains from loan approvals, certain vested groups within the bank have turned to promotions and transfers as alternative avenues for influence and benefit. Such practices, critics say, further weaken internal discipline and credibility.

Janata Bank Managing Director Md Mojibur Rahman has denied any wrongdoing, insisting that the promotions followed due process and were approved in the presence of representatives from Bangladesh Bank and the Ministry of Finance. He acknowledged the bank’s fragile condition but said management decisions helped limit losses that were initially projected to be even higher in 2025.

Regulatory officials, however, have raised questions about the timing of these promotions. Bangladesh Bank spokesperson Arif Hossain Khan noted that promotions are typically justified when institutions expand or improve performance. In Janata Bank’s case, he argued, the priority should be reducing expenses and restoring financial discipline rather than increasing managerial ranks.

Concerns have also been raised about the bank’s reliance on high-interest deposits to manage short-term liquidity pressure. Over the past year and a half, Janata Bank has collected nearly Tk 300 billion in deposits, much of it at elevated interest rates. Analysts caution that this strategy may worsen long-term liabilities, especially when such funds are being used largely to cover operating costs instead of generating returns.

Despite mounting losses, employee-related expenses continue to rise. Salary and benefit costs increased from around Tk 13.7 billion in 2024 to more than Tk 15 billion in 2025. Continued promotions across various tiers have added to this burden, intensifying concerns about cost management.

The bank’s current predicament traces back to the period after 2009, when political considerations increasingly influenced board formation, senior appointments, promotions, and credit decisions. During that time, large loans were extended to several major business groups, many of which later defaulted. A substantial portion of those loans remains unrecovered.

Economists warn that rewarding officials through promotions in such a distressed institution sends the wrong message. CPD Executive Director Dr Fahmida Khatun has argued that repeatedly using public funds to sustain state-owned banks without addressing governance failures is unsustainable. When defaulted loans exceed 70 percent, she said, the focus should shift to decisive restructuring rather than cosmetic measures.

While Janata Bank’s leadership maintains that steps are being taken to improve governance, critics believe that prioritizing promotions over loan recovery, asset liquidation, and institutional reform reflects misplaced priorities. Without deep and credible reforms, they warn, such decisions may further erode confidence and delay any meaningful turnaround.