The death toll from a ferry disaster in Bangladesh jumped to 26 on Monday after rescuers pulled the vessel out of the water and found more bodies inside, officials said Monday.

The sunken ferry was extracted from the heavily polluted Shitalakshya River in the central district of Narayanganj as hundreds of onlookers and relatives of the missing watched from the shore.

"We have found 21 bodies today after the ship was pulled out of the water," local official Mustain Billah told AFP.

The one-and-a-half storey Sabit Al Hasan sank after it collided with a bigger cargo vessel on Sunday.

The vessel had departed less than an hour earlier from Narayanganj, 20 kilometres (12 miles) from Dhaka, officials told AFP.

A local police inspector said the ferry was packed with passengers after the government confirmed it would impose a seven-day lockdown across the country to combat the recent rise in coronavirus cases.

Billah said the ship was carrying at least 46 people when it left.

"Some 20 people swam to safety after the vessel sank," he told AFP, adding several people could still be missing. "We have ordered a probe into the accident," he said.

Local police chief Dipak Saha said rescue efforts were hampered for hours by a powerful storm that hit after the accident.

Under the lockdown, all domestic travel services -- including buses, ferries, trains and flights -- will be suspended from Monday.

Shops and malls will be shut for a week and a night curfew in effect.

Public and private sector businesses were told to only have a skeleton crew in their offices.

Ferry accidents are common in Bangladesh, a delta nation crisscrossed by hundreds of rivers.

Millions of people are heavily reliant on ferries for transport, particularly in the country's southern coastal region, but the vessels have a poor safety record.

Experts blame poor maintenance, lax safety standards at shipyards and overcrowding for many of the accidents.

In June last year, a ferry sank in Dhaka after it was hit from behind by another ferry, killing at least 32 people.

In February 2015, at least 78 people died when an overcrowded ship collided with a cargo boat in a central Bangladesh river.

The number of accidents has dropped sharply in recent years as authorities crack down on unseaworthy vessels.