Emergency workers have rescued 43 Bangladeshis in the Bay of Bengal since the trawler capsized in strong currents some 2.5 kilometres (1.5 miles) offshore on Thursday, officials have said.
"We recovered seven bodies from the lower deck of the boat on Friday morning," coastguard captain Shahidul Islam told AFP.
The bodies were found after the coastguard towed the boat to shore, Islam said.
Although dozens were initially feared missing, Islam said Friday officials now believe the figure is lower after interviewing more of the survivors.
"We don't know how many people are still missing because the survivors gave us different estimates as to how many people were aboard the boat when it capsized," he said.
"But it was a small boat and we think the number of missing won't be more than a dozen."
The coastguards along with the Bangladesh navy were scouring the sea, but with more than 24 hours elapsing since the disaster, hopes were fading of finding them alive, he said.
All of the passengers were Bangladeshis heading to Malaysia by sea illegally, police have said.
The boat hit strong currents in a channel shortly after leaving a coastal town near the southern port city of Chittagong.
Thousands of impoverished Bangladeshis and ethnic Rohingya refugees from Myanmar attempt the perilous journey to Malaysia every year.
Ferry and other boating accidents are common in Bangladesh, home to thousands of small and medium-sized boats, 95 per cent of which officials say do not meet minimum safety regulations.
Rights groups say thousands have perished attempting the 3,200-kilometre (2,000-mile) journey to Malaysia, with many falling into the hands of people traffickers.
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