Bangladesh Bank has delivered positive news regarding the country’s foreign exchange reserves, as it surpassed $25 billion before the end of March, following a record inflow of remittances this month. According to data released by the central bank on Thursday (March 27), the country’s gross reserves have risen to $25.44 billion. Bangladesh Bank re-fixed MFS transaction limit This comes after a significant increase in remittance inflows, which reached $2.94 billion in the first 26 days of March – the highest for any month in the country’s history. However, as per the International Monetary Fund (IMF) methodology under the Balance of Payments and International Investment Position Manual (BPM6), Bangladesh’s net reserves currently stand at $20.29 billion. The net reserve figure is calculated by deducting short-term liabilities from the gross reserves. On March 9, Bangladesh paid $1.75 billion to settle import bills through the Asian Clearing Union (ACU), which temporarily reduced the gross reserves to below $25 billion and the net reserves to below $20 billion. Remittance inflow surges amid forex reserve crisis After this payment, the country’s reserves under the BPM6 standard had dropped to $19.75 billion but have since rebounded above the $20 billion mark. The surge in remittances has played a crucial role in replenishing the reserves, providing much-needed relief to the economy ahead of Eid. Central bank officials remain optimistic that continued inflows will help stabilise the foreign exchange reserves further. Speaking to the media, Bangladesh Bank’s spokesperson and Executive Director, Arif Hossain Khan, confirmed the latest reserve figures and expressed confidence in the country's external financial position. NBR preparing stricter tax exemption policy With the upcoming Eid festivities, the record remittance inflows have brought a timely boost to the economy, offering a sense of optimism amidst ongoing financial challenges.

Bangladesh Bank has allowed Bangladeshi startup businesses to invest up to US$ $10,000 or equivalent foreign currency to form a single company abroad. According to a circular issued by the central bank on Thursday, startup businesses in Bangladesh can send $10,000 to form a single company abroad. This permission has been granted under the Foreign Exchange Control Act, 1947. As a result, the resident companies can now send remittances to establish companies abroad by applying to the bank. Banks asked to shore up online services, keep ATMs full and secure before 9-day holiday According to the circular, Bangladeshi citizens at the individual level have been allowed to establish companies abroad in the same manner. In this case, the applicants must have innovative ideas, which will create opportunities for investment and income in Bangladesh, including expanding their business abroad. In addition to small-scale investments, Bangladesh Bank has allowed resident companies to invest abroad by swapping their own shares/securities with those of foreign companies. Bangladesh Bank lifts ban of foreign tour for NBFIs In this method, there will be no need for cash to invest abroad. In this system, when considering investment proposals abroad, the swap ratio of shares/securities must be consistent with global best practices, said the central bank circular.  

The Bangladesh Bank has lifted the ban on foreign travel by officers and employees of Non-Bank Financial Institutions (NBFIs). The Financial Institutions and Markets Department of Bangladesh Bank issued a directive in this regard on Monday. The directive states that a circular was issued on May 29, 2022, asking officers and employees of finance companies to stop traveling abroad to participate in training, study tours, exposure visits, meetings and seminars. Under the new directive, officers and employees of finance companies can travel abroad with the approval of the appropriate authorities in accordance with the relevant policies of their own organizations for essential foreign travel. However, officers and employees of finance companies who have separate instructions from Bangladesh Bank regarding foreign travel must comply with the provisions of the relevant directives.

Initiatives are underway to enhance Bangladesh Bank’s authority in resolving troubled banks and stabilising the financial sector, officials said. Several weak banks are deteriorating further due to liquidity being tied up with industries linked to the S Alam Group, which has almost defaulted. Bangladesh Bank, the country’s central bank, recently disclosed that approximately Tk 3.45 lakh crore in loans have defaulted within the banking sector. This figure is expected to rise further once the assets of these weak banks are assessed. A significant portion of the defaulted loans belongs to troubled banks. The central bank has already appointed auditors to evaluate the asset quality of these institutions to determine their future. Election Commission rejects 20 reform proposals citing threat to authority A new law is being introduced to manage the country’s struggling banks, which may involve mergers or liquidations. To this end, Bangladesh Bank has finalised the draft of the Bank Resolution Ordinance 2025, which will grant the central bank the authority to oversee financial institutions, including banks. Bangladesh Bank Governor Dr Ahsan H Mansur recently stated that Bangladesh had witnessed one of the world's largest banking sector scams due to the abuse of state power, leading some banks to the brink of collapse. He explained that auditors—both domestic and international—are conducting assessments in consultation with the World Bank. Once the asset evaluations are completed, Bangladesh Bank will decide the fate of these banks. Dr Mansur said, “We do not yet know the true quality of the assets held by some troubled banks. However, a preliminary investigation suggests that over 80% of their loans were issued to a single group, while the remaining deposits were allocated to benefit the same group’s affiliates.” He pointed out that some banks would struggle to survive as their liabilities exceed their assets. Restoring Trust in the Banking Sector Dr Mansur emphasised the need to restore public trust in banks, stating that Bangladesh Bank will take all necessary measures to achieve this. A central bank official noted that most troubled banks are relying on loans from Bangladesh Bank, as their recovery rate is alarmingly low. These banks issued loans in violation of standard banking regulations, leading to their inability to recover despite liquidity support from the central bank. What Lies Ahead for Troubled Banks? A new law is being introduced to manage the country’s weak banks, potentially involving mergers or liquidations. Bangladesh Bank has finalised the Bank Resolution Ordinance 2025, which was recently published on the Financial Institutions Division’s website, inviting feedback from stakeholders. The draft ordinance states that Bangladesh Bank must be granted resolution powers to ensure financial stability by safeguarding depositors’ interests and addressing capital or liquidity risks, insolvency, or threats to a bank’s existence. Consequently, efforts are underway to finalise this law. Surge in substandard products in Bangladesh exposes gaps in govt oversight The ordinance also specifies that in the event of a conflict with existing laws, its provisions will take precedence. Under the ordinance, a 'bridge bank' will be established to manage struggling financial institutions. This entity, created by Bangladesh Bank, will oversee the operations of a failing bank to maintain uninterrupted banking services throughout the resolution process. The bridge bank will ensure the continuity of essential banking functions while addressing financial instability until the troubled banks undergo merger, liquidation, or other necessary restructuring. The draft ordinance highlights several key objectives, including: Protecting depositors' funds Minimising government financial assistance Preventing the depreciation of bank assets Reducing creditor losses Ensuring overall financial sector stability When Bangladesh Bank decides to resolve a scheduled bank, it will issue a formal notification and implement the resolution mechanism under this ordinance. The proposed legislation empowers the central bank to transfer shares, assets, and liabilities of the resolved bank to a third party. Current Weak Banks in Bangladesh As of November 2024, the following banks have been identified as weak: First Security Islami Bank’s Islami Bank Bangladesh PLC Social Islami Bank Union Bank Global Islami Bank Second report of committee to reform NBR expected next month, focusing on automation National Bank Exim Bank ICB Islami Bank Bangladesh Commerce Bank NRB Bank Padma Bank Among these, Islami Bank Bangladesh PLC has shown signs of recovery, benefiting from a large customer base and strong public support. The bank has regained customer confidence domestically and internationally, as evidenced by its leading position in remittance inflows. Causes Behind the Failure of Weak Banks High levels of bad debt Insufficient liquidity Weak management Financial irregularities and corruption Inability to compete in the market A bank is classified as weak when its liquidity or solvency is compromised. This can occur if its financial resources, risk profile, or business model deteriorates significantly. Dr Selim Raihan, a professor of Economics at the University of Dhaka and Executive Director of the South Asian Network on Economic Modelling (SANEM), pointed out that banking sector reforms have taken place worldwide, including in the United States. "As per global practice, weak banks can be merged and in some cases, multiple troubled banks are consolidated under a stronger institution for better management. This has happened in Bangladesh before, particularly after independence," he said.

Several financially strained banks have sought additional liquidity support from Bangladesh Bank to meet the surge in cash withdrawals ahead of Eid-ul-Fitr. According to central bank sources, at least six banks have requested Tk 5,000 crore in liquidity assistance to cope with the increased demand. But the central bank has advised them to borrow from financially stable banks under the Bangladesh Bank guarantee scheme. Bangladesh Bank reconstitutes boards of three private banks Meanwhile, First Security Islami Bank, Global Islami Bank, Social Islami Bank, Union Bank and National Bank have signed agreements with Bangladesh Bank to secure loans under this scheme. Following the change of government in August 2024, Bangladesh Bank provided Tk 29,000 crore in liquidity support to nine banks. As per the central bank’s records: Social Islami Bank (SIBL) received Tk 5,500 crore First Security Islami Bank received Tk 6,500 crore National Bank received Tk 5,000 crore Union Bank received Tk 2,000 crore Global Islami Bank received Tk 2,000 crore Exim Bank received Tk 8,500 crore Bangladesh Commerce Bank received Tk 200 crore ICB Islami Bank received Tk 100 crore AB Bank received Tk 200 crore

Bangladesh's financial inclusion has grown gradually, driven by Bangladesh Bank’s introduction of "No-Frill Accounts" (NFAs). These accounts, with minimal or zero balance requirements and no-fee services, enable low-cost access to banking for a wider population, according to a Bangladesh Bank report on Tuesday. Stocks slide both in Dhaka and Chattogram The report showed the impact of NFAs on financial inclusion, noting that these basic accounts were aimed at people from various socio-economic backgrounds. NFAs were designed to provide simple, cost-effective access to banking. The latest report showed that, as of December 2024, the total number of NFAs reached 32,591,450, with deposits totalling Tk 6,823.62 crore. Accounts opened with Tk 10/50/100 deposits (excluding school banking and accounts for street children/working minors) accounted for 28,123,390 of these, with cumulative deposits of Tk 4,685.11 crore. The number of NFAs grew by 0.90% from the previous quarter and 4.22% year-on-year. The largest segment consists of accounts linked to Social Safety Net (SSN) programs, which make up 37.12% of the total, followed by accounts for farmers (36.95%), said the report. By December 2024, Tk 896.26 crore in credit had been disbursed to Tk 10/50/100 account holders through refinancing schemes, supporting financial stability. These accounts also helped distribute foreign remittances, with Tk 772.7 crore received by the end of the quarter, it added. Additionally, 10,439 new school banking accounts were opened, and 39,634 accounts were opened for street children and working minors. The report noted that the top five banks account for 79.05% of these accounts, with Sonali Bank leading at 24.07%. Gold price increases by Tk 2,613 per bhori in Bangladesh NFAs have been crucial in integrating financially excluded individuals into formal banking, said the report.

The number of Tk1.0 crore and above has increased by 4,954 in three months, reflecting a regained confidence in the banking system.Banking sector experts say that money outside the banking system has started returning to the bank again. Wall Street edges lower ahead of US inflationAs a result, the number of deposits in the bank has increased. At the same time, the number of bank accounts of the wealthy has also started increasing.According to Bangladesh Bank's latest financial update, the number of accounts of individuals and institutions with more than Tk 1.0 crore and above has increased by 4,954 in three months. Currently, there are a total of 1,22,081 such account holders.According to the Central Bank, the total number of accounts in the banking sector up to December 2024 was 16.32 crore. The total deposit balance in these accounts stood at Tk18,83,711 crore. Stock market trends maintain upward momentum in Dhaka, ChattogramAt the end of September last year, the total number of accounts in the banking sector was 16,2028,155. These accounts had deposits of Tk18,250,33 crore. Accordingly, the number of accounts in the banking sector increased by 12,19,277 in three months. The volume of deposits increased by Tk45628 crore.The report said that at the end of December 2024, the number of bank accounts with deposits of more than Tk1.0 crore stood at 1,22,081, which was 1,17,127, three months ago in the September quarter. Bangladesh Bank reconstitutes boards of three private banksAccordingly, the number of accounts above Tk1.0 crore increased by 4954 in three months. Earlier, in the June quarter of last year, there were a total of 1,18,784 accounts deposited Tk 1.0 crore and above.

Bangladesh Bank has reconstituted the boards of directors of three private banks in its latest move to reform troubled financial institutions. This marks the central bank’s second initiative to overhaul the boards of struggling banks. The three banks are NRBC Bank PLC, NBR Bank PLC and Meghna Bank PLC. In the newly formed board of NRBC Bank, former Krishi Bank Managing Director Md. Ali Hossain Prodhania has been appointed as Chairman. Other board members include former Bangladesh Bank Executive Directors Md. Abul Bashar and Md. Anowar Hossain, former Sonali Bank Deputy Managing Director Md. Nurul Hoque, Supreme Court lawyer Barrister Md. Shafiqur Rahman, American International University–Bangladesh (AIUB) Professor Dr. Syed Abul Kalam Azad, and Chartered Accountant Muhammad Emdad Ullah. Bangladesh Bank halts exchange of new notes for Eid At NBR Bank PLC, entrepreneur-shareholder Iqbal Ahmed has been appointed as Chairman. The new board consists of former Grameen Bank Board Member Ferdous Ara Begum, former Bangladesh Bank Executive Director Sheikh Md. Selim, former Mercantile Bank Managing Director Md. Kamrul Islam Chowdhury, former Prime Bank Deputy Managing Director Sheikh Matiur Rahman, North South University Professor Sharif Nurul Ahkam, and Chartered Accountant Mizanur Rahman FCA. Meanwhile, the restructuring of Meghna Bank's board is still in progress. According to insiders, Bangladesh’s banking sector has been grappling with a prolonged crisis, which has intensified over the last two years. Key issues include the dominance of influential groups over bank management, misappropriation of funds under the guise of loans, large-scale money laundering, mounting defaulted loans, severe liquidity shortages and the ongoing dollar and foreign reserve crisis. Following the change in government on August 5, Bangladesh Bank dissolved the boards of 11 banks, including Islami Bank—formerly controlled by the S Alam Group—and appointed new boards. Bangladesh Bank reduces CRR to increase cash flow in banks This latest intervention marks the second restructuring effort by the central bank under the tenure of Governor Dr. Ahsan H. Mansur.

Bangladeshi expatriates sent US $814.29 million in remittances in the first eight days of March, according to the latest update from Bangladesh Bank. Of this amount, $231.35 million came through government banks, $68.45 million through the specialised Krishi Bank, $512.94 million through private banks, and approximately $1.54 million through foreign banks. NBR launches customs risk management to address money laundering But nine banks did not receive any remittances during this period. These include the state-owned Bangladesh Development Bank (BDBL) and the specialised Rajshahi Krishi Unnayan Bank. Among private banks, Community Bank, ICB Islami Bank, and Padma Bank recorded no remittance inflow. Foreign banks that did not receive remittances include Habib Bank, National Bank of Pakistan, Woori Bank, and State Bank of India. Despite concerns over the country's dwindling foreign exchange reserves, the remittance inflow has shown a positive trend. Bangladesh sees sluggish growth in new business and employment in Feb: Report From July to February of the current fiscal year (FY) 2024-25, Bangladesh received a total of $18.49 billion in remittances, marking a 23.8 percent increase compared to $14.93 billion in the same period of FY 2023-24. Bangladesh’s stock market plunges on week’s first trading day According to Bangladesh Bank data, remittance inflows over the last eight months were as follows: July: $1.91 billion August: $2.22 billion September: $2.4 billion October: $2.39 billion November: $2.2 billion December: $2.64 billion January: $2.19 billion February: $2.53 billion According to analysts, the steady growth in remittance inflows is crucial for Bangladesh’s economy, especially as the country grapples with a foreign exchange reserve crisis. They suggest that the increase in remittance could provide much-needed support to the economy by stabilising reserves and maintaining liquidity in the banking sector.

The foreign exchange reserves of Bangladesh fell below US $20 billion after paying $1.75 billion liabilities of Asian Clearing Union (ACU), said Arif Hossain Khan, Executive Director and Spokesperson of Bangladesh Bank, on Sunday. According to Bangladesh Bank data, the country's gross foreign exchange reserves have dropped to $25 billion after paying the ACU’s bill. As per the standard of the International Monetary Fund's (IMF) BPM-6 calculation, the reserve is now $19.70 billion. NBR launches customs risk management to address money laundering Earlier, on March 6, the gross foreign exchange reserve was $26.60 billion. As per the BPM-6 it was $21.40 billion. The Asian Clearing Union (ACU) is a payment arrangement designed to facilitate the settlement of import and export transactions among its member countries. Currently, its members include Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka, with their respective central banks serving as participants in the system. By enabling transactions in a structured manner, the ACU helps streamline trade payments and reduce the need for hard currency reserves in bilateral trade among these nations. The Balance of Payments and International Investment Position Manual, 6th edition (BPM-6), is the IMF's standard methodology for compiling balance of payments and international investment position statistics. It provides a more accurate measure of usable reserves by ensuring consistency in reporting across countries. The difference between gross reserves and BPM-6 reserves arises because the IMF method excludes certain types of reserves that are not readily available for use, offering a clearer picture of a country's liquid foreign exchange holdings.