United News of Bangladesh

Dr. Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), on Saturday warned that the government’s practice of borrowing from the central bank to meet budget deficits is ‘suicidal’ for the national economy. Such borrowing fuels inflation and severely erodes the purchasing power of general public, she said at a shadow parliamentary debate organised by Debate for Democracy at the Bangladesh Film Development Corporation (FDC). She urged the government to prioritise international sources instead of banking channels to mitigate deficit pressures. Addressing the upcoming FY 2026-27 budget, Dr. Fahmida advocated for a ‘cost-effective’ budget with clear policy directions. She called for a transition from wholesale subsidies to a target-based system, specifically prioritising sectors like agriculture, irrigation, and public transport. "Wholesale subsidies in power and energy often benefit capable individuals who do not require them," she said suggesting that these funds be diverted to ensure food security. The CPD chief lauded the government’s initiatives like the Family Card and Farmer’s Card under social safety net programmes but stressed the need for transparency. "To reap the real benefits, accountability in beneficiary selection must be ensured to prevent the irregularities and corruption seen in the past," she added. Dr. Fahmida recommended temporary waivers on VAT and taxes for imported essential goods to provide relief to citizens amidst global market volatility. She cautioned that the impact would be limited if market management remains weak. She also suggested adjusting domestic fuel prices in sync with the global market to ensure reductions reach consumers when international prices drop, increasing revenue through digital compliance rather than bank borrowing, boosting allocations for productive sectors and skill development programmes to address unemployment. She also emphasised the need to enhance energy storage capacity to manage emergency situation. Debate for Democracy Chairman Hasan Ahmed Chowdhury Kiron highlighted the severe economic challenges facing the country. He noted that the current BNP government assumed office while grappling with the lingering impacts of the Russia-Ukraine war and the ‘economic scars’ left by the previous government. “The government is struggling with an energy crisis, rising inflation, low investment, and a high volume of non-performing loans and foreign debt,” Kiron said. He noted that while the government attempted to stabilise the market without raising fuel prices, it was eventually forced to adjust prices for diesel, petrol, octane, and kerosene in line with the global market. Kiron revealed that the government incurred a loss of Tk 165 crore daily on fuel sales, totaling a loss of Tk 4,300 crore in April alone. Without the price adjustment, the subsidy requirement would have reached Tk 12,000 crore by June, he added. Debaters from Kabi Nazrul Government College (Government side) and Dhaka College (Opposition side) participated in the shadow parliament. Trophies, crests, and certificates were awarded to the participants. The panel of judges included Professor Abu Mohammad Rais, Dr. S.M. Morshed, Dr. Tajul Islam Chowdhury Tuhin, and journalists Abul Kashem and Maidur Rahman Rubel. Kabi Nazrul Government College was declared the winner of the debate.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has urged Bangladesh Bank to strengthen policy support and extend key deadlines to help the readymade garment (RMG) sector cope with ongoing multidimensional challenges. A BGMEA delegation led by Director Majumder Arifur Rahman made the request during a meeting with Bangladesh Bank Deputy Governor Dr. Md. Kabir Ahmed at the central bank headquarters on Wednesday, according to a press release issued on Thursday. The association specifically called for an amendment to BRPD Circular-07/2025, seeking to extend the eligibility period for policy support for defaulted accounts from November 2025 to March 31, 2026. BGMEA representatives said the extension would enable struggling and “sick” industrial units to access necessary support and resume normal operations. They added that such measures could also help reduce non-performing loans (NPLs) in the banking sector and improve overall financial stability. The delegation further urged the central bank to issue mandatory directives to commercial banks to ensure proper implementation of the announced policy support. It noted that many eligible factories are missing out on benefits due to delays or lapses in execution by banks. The BGMEA delegation requested more time for closed factories to apply for reopening. While welcoming the government’s initiative to revive shuttered units, the association stressed the need for additional time to collect and verify accurate data from affected businesses to ensure a transparent and effective rehabilitation process. Deputy Governor Dr. Md. Kabir Ahmed assured the delegation that the central bank would consider the proposals and take appropriate steps. Former BGMEA Vice President Shahidul Islam, PR and Publicity Committee Chairman Masud Kabir, and senior officials from the Bangladesh Bank’s Banking Regulation and Policy Department (BRPD) were present.

After a hiatus of nearly two months, Bangladesh Bank (BB) has resumed purchasing US dollars from commercial banks through auctions to maintain stability in the foreign exchange market and keep the exchange rate under control. Bangladesh Bank spokesperson Arif Hossain Khan said the central bank bought $50 million from four commercial banks on Thursday at a cut-off rate of Tk 122.75 per dollar. This followed a purchase of $70 million at Tk 122.70 per dollar on Wednesday. With these transactions, the central bank has purchased a total of $120 million so far in April. In the current fiscal year FY2025–26, the total dollar purchase by the central bank stands at $5.61 billion. A high-ranking official of the central bank said banks were verbally instructed earlier this week to purchase remittance dollars at a maximum rate of Tk 122.90. However, by buying dollars at a slightly lower rate through the auction, the central bank sent a clear signal to the market that its goal is to stabilise the rate around Tk 122.75. The market has recently felt some pressure due to geopolitical tensions, particularly surrounding US-Iran tensions, causing some banks to acquire dollars at higher rates. However, central bank officials expect the situation to normalize soon, leading to a potential dip in the exchange rate.  

Card-based transactions in Bangladesh have surged by about 143 % over the past five years, according to the latest report of Bangladesh Bank. Data from the central bank shows that total card transactions stood at Tk 20,625 crore in January 2021. The figure rose sharply to Tk 50,044 crore by December 2025, highlighting the rapid expansion of cashless transactions across the country. The report also shows a significant rise in the number of cards in circulation. In January 2021, the total number of cards was 2.40 crore which increased to more than 5.18 crore by December 2025, marking a 115 percent growth during the period. At present, 61 banks and one non-bank financial institution (NBFI) are providing card services in Bangladesh. Among them, 55 banks offer debit card facilities to their customers. An analysis of consumer spending patterns indicates that credit card holders spent Tk 3,930 crore within the country in December alone last year. Of this amount, the largest share Tk 1,740 crore was spent at departmental stores. The report also analysed spending by foreign cardholders in Bangladesh, showing that citizens of the United States accounted for the highest expenditure in the country. Nationals from the United Kingdom, India, Mozambique, Australia, Canada and Saudi Arabia also made notable contributions to foreign card spending.

Bangladesh Bank maintained a tight monetary stance for the second half of fiscal year 2025-26, keeping the policy rate unchanged at 10%, as the central bank seeks to contain inflation while pushing lenders for increasing private-sector credit. Governor Ahsan H Mansur unveiled the January–June monetary policy on Monday at a press conference at the central bank’s headquarters in Motijheel, marking the final policy statement under the interim government. While key interest rates were left unchanged, the central bank cut the Standing Deposit Facility (SDF) rate by 50 basis points to 7.5% from 8%, a move aimed at discouraging banks from parking excess liquidity with the central bank and encouraging lending and inter-bank market activity. The Standing Lending Facility (SLF) rate was maintained at 11.50%. Keeping money at the central bank is now less profitable, Dr Mansur said, explaining that the SDF reduction is intended to push banks toward private-sector credit and the inter-bank market. Bangladesh Bank said inflation, although easing in recent months, remains above its 7% target and warned of renewed price pressures stemming from higher spending ahead of national elections and Ramadan, seasonal increases in essential commodity prices, and the possible implementation of a new public-sector salary structure. “Lowering the policy rate at this moment could put pressure on the Taka and reignite import-driven inflation,” the governor said. Bangladesh Bank buys another $196.5 million to stabilize forex market The banking sector has shown signs of recovery in deposits, with growth rising from below 7% in August 2024 to 11% by December 2025. However, officials noted a “flight to quality,” as depositors increasingly favour banks with stronger reputations. At the same time, non-performing loans surged to 36% as of September 2025. The central bank attributed the jump to the adoption of international standards requiring stricter loan classification and reporting. Bangladesh’s external position has strengthened, supported by a stabilised foreign-exchange market. Foreign exchange reserves increased to $33.2 billion in December 2025 from $25.6 billion in August 2024. For the first time in years, the central bank has not sold any dollars from its reserves since August 2024. Instead, it purchased $4.3 billion from the inter-bank market in FY26. Bangladesh Bank also cleared $3.5 billion in overdue payments to foreign lenders, a move it said significantly boosted international confidence in the economy. The press conference was attended by Deputy Governors Dr Habibur Rahman and Nurun Nahar, along with the head of the Bangladesh Financial Intelligence Unit (BFIU) and other senior executive directors.

Bangladesh Bank has reversed a contentious policy that barred depositors of five recently merged banks from receiving profits for 2024 and 2025, following widespread criticism and ethical concerns. The central bank’s move restores interest payouts, easing tensions among affected account holders. Under the new decision, depositors will now receive a 4 percent profit rate for those two years. Starting from the current year (2026), market-based profit rates will apply. Currently, the bank has announced a profit rate of approximately 8.5 percent. Read more: Banking sector reform can’t be done overnight: Salehuddin The central bank communicated this updated policy via a letter sent to the administrators of the affected banks on Wednesday (January 21). Backtrack on ‘Haircut’ Policy The reversal comes just a week after a January 14 directive which stated that no profit would be applicable to any deposits from January 1, 2024, to December 28, 2025. That letter even suggested that any profit already withdrawn by depositors would be "adjusted" from their principal amount, a process known as a ‘haircut’. The initial announcement sparked widespread outrage. Many depositors gathered at various branches of the newly formed Sammilito Islamic Bank PLC to express their anger. Furthermore, the Central Shariah Board intervened, stating it was ‘not Shariah-compliant’ to shift the burden of embezzlement, caused by the negligence of the banks and the regulator, onto the depositors. Read more: Depositors of 5 merged banks can withdraw Tk 2 lakh initially, then Tk 1 lakh every 3 months  The government recently created Sammilito Islamic Bank PLC by merging five Shariah-based lenders—Exim Bank, Social Islami Bank, First Security Islami Bank, Global Islami Bank, and Union Bank—that were weakened by massive loan irregularities and embezzlement. These banks hold approximately Tk 1.42 lakh crore in deposits from nearly 76 lakh depositors. In contrast, out of the Tk 1.92 lakh crore distributed as loans, roughly 77 percent has become defaulted. Shariah and Accountability Internal debates within the central bank and insights from Islamic banking experts played a key role in this policy shift. Experts pointed out that: Mudaraba Principles: In Shariah banking, depositors are "Sahib-al-Mal" (capital providers) and the bank is the ‘Mudarib’ (manager). Liability for Negligence While depositors normally share business losses, Shariah standards (specifically AAOIFI standards followed in Bangladesh) dictate that if a loss occurs due to the bank's negligence, misconduct, or breach of trust, the bank alone must bear the liability. Read more: Bangladesh Bank to ease rules, give banks more freedom: Governor By reinstating the profit, the central bank acknowledges that depositors should not be penalised for the systemic failures and financial crimes that led to the banks' instability.

The depositors of five crisis-hit Shariah-based banks in Bangladesh will have to forgo profits on their savings for two years as the central bank moves to stabilise the lenders ahead of a planned merger. Bangladesh Bank has ordered a ‘haircut’ on profits accrued during 2024 and 2025, meaning depositors will not receive any returns for that period and will see their account balances reduced. The directive follows what the regulator described as international resolution practices for distressed banks. Institutional deposits to be converted into shares as Bangladesh Bank finalises 'Sammilito Islami Bank' merger The decision was conveyed on Wednesday through letters sent to administrators of First Security Islami Bank, Global Islami Bank, Union Bank, Exim Bank and Social Islami Bank. The five banks have been merged into a single entity, ‘Sammilito Islamic Bank PLC’. Under the instruction, all deposit accounts must be recalculated based on their status as of December 28, 2025. Any profit credited between January 1, 2024 and December 28, 2025 must be removed, with the final balance determined after applying the prescribed haircut. “To ensure the balanced implementation of the Resolution Scheme, all deposit accounts must be recalculated,” the central bank said in its letter, adding that the process should be completed swiftly. Bank Merger: 'Sammilita Islami Bank' receives final approval Bangladesh Bank officials said the lenders incurred heavy losses over the two-year period, leaving them unable to distribute profits to depositors. Prior to the directive, the banks had offered profit rates ranging from 7 percent to 9 percent on deposits. According to central bank data, the five banks collectively serve about 7.5 million depositors and hold roughly Tk142,000 crore in deposits. Their total outstanding loans stand at around Tk193,000 crore, a large portion of which is classified as defaulted. The move means depositors will lose not only two years of expected earnings but will also experience a direct reduction in their account balances — an unusually severe step in Bangladesh’s banking sector. It follows an earlier decision in which the share value of the five banks was declared zero, wiping out investments held by sponsors and shareholders. Exim Bank was previously controlled by Nazrul Islam Mazumder, former chairman of the Bangladesh Association of Banks. The remaining four lenders were controlled by Saiful Alam, head of the S. Alam Group. Now a writ on the 5 banks' merger filed with HC Both were widely known as close associates of ousted Prime Minister Sheikh Hasina and allegedly held significant shareholdings while securing large loan facilities through various entities. The merger marks one of the most sweeping banking restructurings undertaken by Bangladesh Bank as it seeks to contain systemic risk and restore confidence in the Islamic banking segment.  

Bangladesh Bank has launched a new Risk-Based Supervision (RBS) framework, marking a major shift in how the country’s banking and financial institutions are monitored as authorities seek to restore confidence among depositors after years of sectoral stress. The central bank on Sunday formally moved away from a traditional, compliance-driven oversight model to a system that prioritises supervision based on the specific risk profiles of individual institutions. Officials say the new approach will allow regulators to identify financial vulnerabilities earlier and respond more decisively. Under the RBS regime, Bangladesh Bank will abandon a “one-size-fits-all” model of supervision. Instead, banks and financial institutions will be assessed and monitored according to the level and nature of risks embedded in their operations, including governance, asset quality and liquidity exposures. To support the transition, the central bank has completed a major internal restructuring. Thirteen existing departments have been reorganised into 17 specialised units, including 12 bank supervision departments that will provide targeted oversight based on real-time data. Five additional specialised units have been created to focus on digital banking, data analytics, payment systems and policy formulation. A separate department has also been set up to monitor Anti-Money Laundering and Terrorist Financing activities, modelled on the Bangladesh Financial Intelligence Unit (BFIU), signalling a stronger regulatory focus on financial integrity. The launch of the framework had initially been scheduled for January 1 but was postponed following the declaration of state mourning over the death of former Prime Minister Begum Khaleda Zia. Arif Hossain Khan, Executive Director and spokesperson of Bangladesh Bank, said the reorganisation process has been completed and the full implementation of RBS officially began on Sunday. Bangladesh Bank buys $3.05 billion to stabilise forex market “This will be a far more rigorous supervisory regime,” he said, adding that oversight will be driven by data accuracy and proactive risk assessment rather than routine compliance checks. Central bank officials said the results of risk assessments under the new framework could trigger tough enforcement actions against weak institutions. These may include the removal of managing directors, dissolution of boards of directors and, where necessary, the application of the Bank Resolution Ordinance to deal with failing banks. The reform is seen as a cornerstone of the interim government’s broader effort to clean up the banking sector, curb mismanagement and rebuild public trust in the financial system after a period marked by loan defaults and governance failures.

Bangladesh’s financial sector stands at a defining juncture at the end of the 2025, marked by cautious stabilisation efforts but weighed down by deep-rooted structural weaknesses. While policymakers point to modest macroeconomic improvements and renewed discipline, restoring confidence, reviving private investment and repairing the financial system remain formidable challenges. From a macroeconomic standpoint, 2025 was largely a year of consolidation rather than acceleration. Inflation stayed elevated for much of the year, compelling authorities to maintain a tight monetary stance. Although inflationary pressures eased slightly towards year-end, the adjustment came at the cost of slower economic activity. According to the Bangladesh Bureau of Statistics (BBS), the general point-to-point inflation rate stood at 8.29 percent in November 2025, marginally up from 8.17 percent in October. Economic growth also fell short of earlier targets, reflecting subdued domestic demand and weak private sector investment. Both the government and the central bank repeatedly argued that short-term pain was necessary to restore macroeconomic balance and credibility. The financial sector—particularly the banking system—remained the most critical pressure point throughout the year. Non-performing loans stayed stubbornly high, underscoring long-standing governance failures, weak credit appraisal and ineffective recovery mechanisms. Despite repeated reform pledges, defaulted loans continued to erode bank balance sheets, limiting their ability to extend fresh credit. Financial sector reforms showing visible progress despite challenges: Governor Defaulted loans in the country's banking sector reached 34.6 percent of all disbursed credit till June this year, the highest level since 2000, exposing the fragile state of the banking system and renewing concerns about financial governance. Defaults surge to 34.6 percent of credit as Bad loans jump Tk 3,88,573 crore while Irregularities, weak oversight fuel crisis and the State banks hold 44.6 percent defaults. For much of 2025, banks prioritised liquidity management and survival over risk-taking, further tightening credit conditions for businesses. In a major intervention, Bangladesh Bank merged five struggling Islamic banks—First Security Islami Bank, Union Bank, Global Islami Bank, Social Islami Bank and EXIM Bank—into a new state-backed entity, tentatively named Sammilito Islami Bank (United Islamic Bank). The central bank dissolved their boards, appointed administrators and injected government capital to protect depositors and restore confidence, aiming to create a unified and stronger Islamic bank by late 2025 or early 2026. Private sector credit growth remained one of the weakest indicators in 2025, falling to a four-year low of around 6.23 percent by October, well below the central bank’s target. High interest rates, political uncertainty, power shortages and weak investor confidence discouraged borrowing, stalling new investment and business expansion despite export growth. High lending rates—often 16–17 percent—combined with stricter collateral requirements, led many entrepreneurs to delay expansion or rely on internal funds. The slowdown in capital machinery imports for much of the year reflected this hesitation. However, signs of cautious recovery emerged late in the year. Letters of Credit (LCs) for capital machinery rose by about 23 percent in the first quarter of FY2025-26, following three years of decline. During the July–September 2025 quarter, LCs climbed to $471.7 million, up from $383.9 million a year earlier, driven mainly by export-oriented sectors such as textiles, supported by improving foreign exchange stability. Still, overall private investment remained subdued. Private investment as a share of GDP fell to 22.48 percent in FY2024-25, the lowest in five years, signalling waning confidence at a critical moment as Bangladesh prepares for graduation from Least Developed Country (LDC) status. Investor sentiment in 2025 was shaped not only by financial conditions but also by broader governance concerns. Businesses frequently cited policy uncertainty, administrative delays and weak contract enforcement as major deterrents. While several reform initiatives were announced, uneven implementation led many local investors to adopt a wait-and-see approach, while foreign investors remained cautious despite Bangladesh’s large market and strategic location. The capital market offered limited relief. Although there were brief rallies, overall performance failed to attract significant new investment. Volatility, governance issues and limited market depth continued to undermine the stock market’s role as a source of long-term financing. IMF team meets BNP, discusses reforms in financial, social sectors On the policy front, Bangladesh Bank emphasised stronger supervision, improved loan classification and better corporate governance. Discussions on bank consolidation and stricter fit-and-proper criteria for directors gained prominence, though scepticism persisted over whether entrenched interests would allow deep reforms to take root. Meanwhile, the government continued to rely heavily on public investment to support economic activity. Large infrastructure projects played a stabilising role amid private sector hesitation, though economists warned that excessive dependence on public spending could crowd out private investment and raise concerns over efficiency, cost overruns and debt sustainability. The external sector provided some relief. Remittance inflows remained strong, helping stabilise foreign exchange reserves, while export earnings showed resilience despite global uncertainties. Bangladesh saw strong remittance inflows in 2025, crossing $30 billion for the fiscal year (FY25) and showing significant growth in the first half of FY26 (July-Dec 2025), reaching over $15 billion with monthly figures like November's $2.89 billion and a record $3.29 billion in March, driven by a stable exchange rate and crackdowns on informal transfers, boosting the economy. In the July-November period, remittance Inflows reached approximately $13.03 billion, a significant jump from $11.13 billion the previous year. In November 2025, A robust $2.89 billion, up over 31% from November 2024 while in March 2025, a record monthly inflow of $3.29 billion. Export receipts exceeded $20 billion in the first half of FY2025-26, driven mainly by the apparel sector. For FY2024-25, total exports reached $48.28 billion, with RMG earnings at $39.34 billion. As 2025 ends, there is cautious recognition that stabilisation has been achieved, but there is broad agreement that the hardest work lies ahead. Restoring trust in financial institutions, curbing loan defaults and ensuring predictable policy implementation are essential to unlocking private investment. Without decisive reforms, growth is likely to remain below potential, limiting Bangladesh’s ability to absorb its growing labour force—especially as concessional financing and trade preferences diminish after LDC graduation. BRTA provides financial assistance to families of road crash victims in Joypurhat In that sense, 2025 may be remembered as a transitional year—highlighting both the resilience of Bangladesh’s economy and the depth of its structural weaknesses. Whether this adjustment phase evolves into a foundation for sustainable and inclusive growth will depend largely on how effectively financial sector reforms are implemented and private sector confidence is restored in the years ahead.

Bangladesh Bank Governor Ahsan H Mansur on Monday announced that the central bank is taking steps to establish a dedicated fund of Tk 800 to 900 crore to support the country’s growing startup ecosystem. “The fund will be channeled through commercial banks,” he said at a panel discussion at the inaugural session of Bangladesh Startup Connect 2025, held at the Intercontinental Hotel in Dhaka. The event is part of the Bangladesh Investment Summit 2025, organised under the theme “Empowering Innovation, Connecting Opportunities.” The event opened with a formal inauguration followed by a keynote speech from Tanveer Ali, Chairman of Constellation Asset Management Company Ltd and Independent Director of Startup Bangladesh Ltd. Four state-owned banks to remain open on Friday The panel also featured several other speakers including Faiz Ahmad Taiyeb, Special Assistant to the Chief Adviser for the ICT Division; Chowdhury Ashik Mahmud Bin Harun, Executive Chairman of BIDA; and Shish Haider Chowdhury, Secretary of the ICT Division and Chairman of Startup Bangladesh Ltd. The session was moderated by Sadia Haque, CEO of ShareTrip. Highlighting Bangladesh’s strong potential in the startup space, Governor Mansur referenced the success of bKash and expressed optimism about the country producing more breakthrough ventures. “I want to see at least 10 unicorns like bKash in Bangladesh in the future,” he said. Shish Haider Chowdhury also shared updates on the government’s preparations for a 'Fund of Funds,' aimed at mobilising investment to reinforce the startup ecosystem. “This fund will offer critical support to early- and growth-stage startups, enabling them to scale, expand globally, and build long-term sustainability,” he said. Throughout the day, the summit will host startup pitches, policy roundtables, and sector-specific sessions focusing on FinTech, SaaS, Logistics, HealthTech, AgriTech, EdTech, and AI. A key feature of the summit is the Youth Innovation Challenge 2025, organised by Startup Bangladesh. This segment features 15 standout youth-led ventures from across the country, giving young entrepreneurs a platform to pitch their ideas directly to top investors and decision-makers. Startup Connect 2025 is jointly organised by Startup Bangladesh Ltd, the ICT Division, and the Bangladesh Investment Development Authority (BIDA), highlighting the country's rapidly evolving startup landscape and its growing appeal to international investors. Your contribution to eradicating poverty truly inspiring: Chinese banker tells Dr Yunus