Bangladesh is facing an unprecedented banking crisis marked by a surge in default loans. Systemic issues within the banking sector, including flawed regulations and defaulter-friendly policies, have contributed to the crisis. The economic pressure of a severe dollar shortage has exacerbated the situation, further straining businesses and leading to loan defaults. The growing provision shortfall highlights the banking sector’s vulnerability and potential for future economic shocks. Urgent reforms are needed to address the root causes of the crisis, enhance accountability for defaulters, and strengthen the resilience of the banking sector.