Only 200 of the 600 on board are thought to have survived after the double-decker MV Nasreen sank in the Megna river near Chandpur, about 170 kms southeast of the capital Dhaka.
The ferry was on its way to the town of Barisal from Dhaka when it is believed to have been sucked down by a whirlpool.
“The ferry sank at 11 pm on Tuesday night with over 600 people ... according to survivors, only 200 swam to safety or were rescued and the rest sank with the ferry,” said Baktiar Alam, the Chandpur district police superintendent.
Rivers in Bangladesh have been swollen and in full flow, following heavy rains over the past few weeks.
Locals said a rescue ship was at the site and relatives of those missing were crowding the river banks, anxious to find out the fate of their loved ones.
Volunteers of the International Federation of the Red Cross and Red Crescent Societies in Chandpur said they had rescued 10 people from the river.
“We have now set up three first-aid posts to give psychological support to the survivors and relatives of the people feared dead,” a senior rescue official said.
For a country criss-crossed by rivers, ferries are a common mode of transport in Bangladesh.
But because of poor safety standards, they are far from dependable and mishaps such as Tuesday’s are a recurring phenomenon.
More than 300 people were killed in two ferry accidents in April.
Officials blame the disasters on neglect of safety regulations, structural faults, lax law enforcement and poor weather monitoring.
Experts say out of the 20,000 ferries in operation in Bangladesh, only 8000 were registered. Of them, only about 800 had been certified by the authorities worthy of negotiating the mighty rivers.