30/09/2026
City Group's Tk26,000 crore problem could reach bank balance sheets as early as tomorrow. The group's 36 lenders still disagree over its request for a 12-year loan rescheduling plus Tk6,000 crore in new working capital. With the September deadline almost over, they have asked Bangladesh Bank to extend the deferral on loan classification. Without that extension, about Tk26,000 crore could be classified from 1 October, forcing banks into heavy provisioning that would badly hurt their profits.
The regulator is not offering easy relief. Governor Md Mostaqur Rahman told the lenders the September deadline would not move again, and gave them 10 days to either restructure the loans or choose another path. The central bank is also preparing contingency plans, such as Sena Kalyan importing commodities through City Group's distribution network, so that essential supplies are not disrupted during Ramadan.
Why this is alarming for the sector:
The borrower is already weakened. City Group says its sales fell to about Tk14,000 crore in July–December, down from nearly Tk33,000 crore, after it struggled to open LCs from March onward.
The contagion is already visible. About Tk40,000 crore of the group's working-capital limits are stuck with distressed banks and cannot be used.
The collateral offered is weak. For the new credit, the group has offered collateral worth 30% of the amount, in the form of brand value. Bank Asia's MD questioned whether banks should lend more to a borrower that has already missed repayments.
Lenders fear the losses will grow. ONE Bank's MD warned that if the new loans also go bad alongside the old ones, lenders would be in serious trouble. He added that classification would hit sector profits hard.
The recovery plan is slow and uncertain. The group plans to sell Hoshendi Economic Zone projects and land to raise roughly Tk15,000 crore by FY28. However, the valuation work led by EY could take about six months, and lenders are now handling the problem bank by bank rather than acting together.
In short, one of the country's largest food conglomerates is testing both the banks' capacity to absorb losses and the regulator's resolve. This is happening while private credit growth is already weak. Whichever way it goes, whether mass provisioning or more lending to a stressed borrower, bank earnings and confidence in the system will suffer. The outcome also affects listed bank stocks with City Group exposure, which are worth watching on the DSE after 1 October.
With the September deadline approaching, the lenders have yet to reach an agreement and have sought Bangladesh Bank’s approval to extend the deferral period for loan classification.
