Abstract Credit creation and management are the main operations of banks and the prime sources of banks’ revenue. So, a good loan is the stair of banks’ growth as well as of economic development of a country, but a classifed loan can be a threat not only for banks’ survival but also for the overall fnancial system of a country. This paper mainly tries to present a comprehensive picture of present condition of classifed loan in the Private Commercial Bank (PCB) of Bangladesh. In order to do so, a study has been initiated to fnd the trend of classifed loan, its categories, provisioning system and relation to proftability by using some percentages and ratios. In Bangladesh, the banks are classifed into four generations, based on establishment period. For the analytical purpose, three consecutive year’s (2015–2017) data, collected from 20 sample banks selected randomly from four generations, have considered. This study mainly uses secondary data collected from annual reports of sample banks, central bank, related websites and published articles. The result of this research indicates that the classifed loan has a signifcant negative impact on banks’ proftability. By analyzing the quantitative data, it is found that there is a decreasing trend of classifed loan from 1st generation to 4th generation, but it’s not smooth and is very slow. This paper also identifes some multidimensional reasons for the classifed loan and proposes some corrective measures, which will ensure a sustainable economic development for the upcoming future. Keywords: Proftability, Provision, Trend, Generation, Bangladesh Bank Status of Classi fed Loan: A Study on Private Commercial Banks of Bangladesh Nusrat Jahan*, Golam Shahria** Introducton Efcient and smooth fow of saving-investment process is considered as a pre-condition for economic development of any country. Banking system plays an intermediary role in this case because it mobilizes domestic savings and provides necessary capital to the investors. Since Bangladesh is a developing country * Lecturer, Faculty of Business Studies, Premier University Chittagong, Bangladesh. Email: njakhi87@gmail.com ** Lecturer, Faculty of Business Administration, BGC Trust University Bangladesh, Bangladesh. Email: g.s.parveez@gmail.com having an underdeveloped capital market, its economic development mainly depends on banking industry not only for supporting saving – investment culture, but also for facilitating economic activities such as production, distribution, exchange and consumption of wealth. Actually, a bank is acting like a heart in the economic structure and the loan or investment is the lifeblood of it. However, this lifeblood is frequently polluted by a germ familiarize as a classifed loan or default loan, which ultimately deteriorates the health of the entire economic system. Classifed loan is not a very recent problem in Bangladeshi economy; rather, this phenomenon started at the early stage of independence. In the early 1980s, government’s credit expansion policy, feeble infrastructure of bank, unskilled employee, etc., led the banking industry to experience a high default loan (Islam & Liakat, 1999). Default loan is one of the most crucial problems of banking sector of Bangladesh for last few decades. Loan Classifcaton Method A classifed loan is the term used for any loan that a bank examiner has deemed to be in danger or defaulting (BB, Field Survey Report, 2017). Loans are usually classifed by the landing bank, whenever the bank has reasons to believe that the borrower would not be able to repay the loan. In fact, the classifed loan is not a problem of respective bank; rather, it has an enormous impact on the entire banking system of the country. So, Bangladesh bank has taken diferent initiatives and provided guidelines regarding these loans from time to time. According to the last update, all loans and advances will be grouped into four categories namely: (a) continuous, (b) demand, (c) fxed-term loan (d) short-term agriculture and micro credit. For the classifcation purpose, Bangladesh Bank International Journal of Financial Management 10 (1) 2020, 01-17 http://publishingindia.com/ijfm/