Tk 36,706 crore allocated for bank rescue fund in upcoming budget
The government has earmarked Tk 36,706cr in the proposed national budget for FY 2026-27 to bail out and stabilize country’s struggling banking sector.
The allocation comes as part of broader efforts to restore confidence in the financial system and strengthen the sector’s resilience following a sharp rise in non-performing loans (NPLs).
In the revised budget for the current 2025-26 fiscal year, Tk 41,558 crore was allocated for the sector.
During the budget speech Finance Minister Amir Khosru Mahmud Chowdhury said, “To sustain economic recovery and the flow of investment, one of the main priorities of the government’s medium-term strategy is to bring discipline to the banking and financial sector and restore confidence in it.”
“To achieve this, non-performing loans (NPLs) are being reduced, transparency in loan approval and rescheduling systems is being ensured, and accountability in bank management is being strengthened,” he continued.
“A risk-based supervisory system will be introduced to rebuild the financial capacity of weak banks, and recapitalization and management reform measures are being taken where necessary,”
The Finance Minister also noted that the government has to spend over Tk 40,000 crore in the current fiscal year for bank recapitalization.
To eliminate political interference in banking operations and free bank management policies from family influence, necessary legal amendments will be made.
Furthermore, the central bank’s supervisory powers will be strengthened to increase the effectiveness of policy implementation in the financial sector.
According to financial reports, gross non-performing loans (NPLs) across the banking sector have spiked significantly over the past couple of years, bringing the system-wide Capital Adequacy Ratio down to precariously low levels.
This capital erosion has effectively crippled the lending capacity of weaker banks, forcing the government to step in with taxpayer-funded fiscal support.
While the exact operational modalities are still being finalized, the broad framework outlines a phased recapitalization plan.
The funds are expected to be routed through Bangladesh Bank to provide targeted capital injections and emergency liquidity lines to commercial institutions categorized under the “weak bank” list.
“The fundamental goal is to protect the interests of ordinary depositors and prevent a systemic collapse of the financial sector,” the finance minister said in his budget speech.
“However, this cash injection will be tied to strict conditionalities, including institutional restructuring and aggressive loan recovery targets,” he added.
