Bangladesh's trade deficit widened sharply to $7.5 billion in the first four months of the current fiscal year, driven by a surge in imports ahead of Ramadan.

Bangladesh Bank's latest balance of payments data shows the trade deficit rose by nearly $2 billion within a month, reaching $7.5 billion during July-October of FY26. Until September, the deficit stood at $5.7 billion.

Trade balance is a key component of the balance of payments, reflecting the gap between a country's imports and exports over a given period.

Central bank figures show imports during the four months amounted to $22.11 billion, up 5.5% from the same period of the previous fiscal year.

Exports, meanwhile, stood at $14.5 billion, resulting in the widening trade gap.

In October alone, imports reached about $5.3 billion, a notable rise compared with most months over the past year, when imports generally remained below $5 billion.

A senior Bangladesh Bank official said the increase was largely driven by higher imports of petroleum and fertiliser, alongside a rise in shipments of essential commodities ahead of Ramadan.

"With Ramadan approaching, imports of daily necessities increased significantly, pushing up overall import payments during September and October," the official said.

Central bank data show demand typically rises during Ramadan for items such as soybean oil, sugar, lentils, chickpeas, peas and dates. To meet this demand, the opening of letters of credit increased sharply in September and October.

Compared with the same period last year, soybean oil imports rose 36%, sugar 11%, lentils 87%, chickpeas 27%, peas 294%, and dates 231%, according to Bangladesh Bank statistics.

At the same time, imports of petroleum and fertiliser increased by 50% and 25% respectively over the four-month period, compared with the previous fiscal year.

Current account remains in deficit

The widening trade gap also weighed on the current account balance, which posted a deficit of $749 million during July-October. In the same period of FY25, the deficit stood at $640 million.

Current account turns negative in Jul-Sep amid import surge

Economists and central bank officials said the current account remained negative despite a strong rise in remittance inflows, mainly due to higher import payments.

The current account captures transactions related to goods and services trade, income from abroad and remittances sent by expatriates.

Data show remittance inflows rose to $10.1 billion during July-October, up from $8.9 billion in the same period last year. Despite an increase of more than $1 billion, the impact was offset by the expanding trade deficit.

Officials said the surge in imports was the principal factor behind the current account shortfall.

Financial account posts surplus

In contrast, Bangladesh's financial account recorded a surplus of more than $2.1 billion in the first four months of the fiscal year, largely due to higher trade credit and increased medium- and long-term borrowing.

Bangladesh Bank data show trade credit exceeded $1 billion during July–October, compared with a deficit of $450 million in the same period last year.

A senior central bank official said the improvement was also supported by rising medium- and long-term loans.

"Higher inflows from medium- and long-term borrowing have strengthened the financial account position," the official said.

Zahid Hussain, former lead economist at World Bank's Dhaka office, said the financial account had improved significantly due to increased trade credit and longer-term loans.

"As imports rise, credit financing also increases, leading to inflows in trade credit, which is usually an outflow," he said. "This has helped offset pressures from the widening trade deficit."

The Bank of Japan is expected to hike interest rates Friday for the first time since January, pushing them to their highest level in 30 years and potentially exacerbating turmoil in debt markets.

Yields on Japanese government bonds have risen in recent weeks on worries about Prime Minister Sanae Takaichi's budget discipline, while the yen has weakened.

Higher BoJ interest rates make Japanese bonds more attractive than other assets, pushing down their prices but sending yields -- which move inversely -- higher.

Japan's economy contracted 0.6 percent in the third quarter, but BoJ governor Kazuo Ueda said last week that the impact of US tariffs was less than feared.

"So far, US corporates have swallowed the burden of tariffs without fully passing (them) through to consumer prices," Ueda told the Financial Times.

At the same time, inflation has been above the BoJ's target of two percent for some time, with core consumer prices rising 3.0 percent in October.

"The urgency stems from policymakers' recognition that the window for hiking will close once external headwinds intensify," said BMI (Fitch Solutions) in a note.

The majority of economists polled by Bloomberg expect the BoJ to raise its main rate from 0.5 percent to 0.75 percent, which would be the highest since 1995.

The BoJ only began raising rates from below zero in March 2024. The US Federal Reserve is now going in the other direction and cutting rates.

The BoJ's move should help keep inflation in check, which would be welcome news to Takaichi, Japan's first woman prime minister.

She hopes to avoid the fate of her predecessor Shigeru Ishiba, who suffered a string of election debacles in part because of anger over rising prices.

The lower house last week approved an extra budget worth 18.3 trillion yen ($118 billion) to finance a major stimulus package to help households.

But more than 60 percent of the planned spending will come from government borrowing, rekindling market anxiety about Japan's fiscal health.

The country already has the biggest ratio of debt to gross domestic product (GDP) among major economies, with the International Monetary Fund projecting it to hit 232.7 percent this year.

Yields on 30-year bond yields reached a record high in early December, and 10-year yields last week hit their highest level in 19 years.

As well as pushing up bond yields, worries about Takaichi's "responsible proactive fiscal policy" have added to pressure on the yen, which in turn fuels inflation since Japan is so reliant on imports.

"These factors will offset the effects of the economic stimulus measures and undermine the medium- to long-term stability of the economy and financial markets," said Takahide Kiuchi at the Nomura Research Institute.

"This is the contradiction and weakness of the Takaichi administration's proactive fiscal policy," he said.

Gold prices slipped on Tuesday, as investors turned cautious ahead of key US jobs and inflation data, which could provide cues for Federal Reserve policy heading into the new year.

Spot gold lost 0.3 percent to $4,290.33 per ounce, as of 0637 GMT. Bullion has rallied 64 percent year-to-date, smashing multiple records along the way.

US gold futures were down 0.4 percent at $4,316.40.

"We're right up against the former high around $4,380 from mid-October. So the market is essentially asking whether there's enough conviction to break higher, or whether this is a level where momentum starts to fade," said Ilya Spivak, head of global macro at Tastylive.

Traders are pricing in a 76 percent probability of a 25-basis-point US rate cut in January, with some expecting two cuts, according to CME's FedWatch tool. This week's data docket is expected to offer fresh clues on how quickly the Fed may ease policy in 2026.

The combined US employment reports for October and November, due on Tuesday, will lack several details after a 43-day government shutdown curtailed data collection, including October's unemployment rate.

Fed Governor Stephen Miran said current above-target inflation does not reflect underlying supply and demand dynamics that are generating price increases much closer to the central bank's 2 percent target.

Markets are also awaiting weekly jobless claims and the Fed's preferred inflation gauge, the Personal Consumption Expenditures index, due later this week.

Non-yielding bullion typically thrives in lower-rate environments.

Elsewhere, spot silver slid 1.4 percent to $63.03 an ounce, after touching a record high of $64.65 on Friday.

KCM Trade Chief Market Analyst Tim Waterer said silver retains a bullish undertone as industrial demand shows no signs of abating, after a 121 percent rally this year driven by firm industrial and investment demand and tightening inventories.

Stocks tumbled today (15 December) as renewed selling pressure dragged the market deeper into negative territory, extending the ongoing losing streak at the Dhaka Stock Exchange (DSE) amid cautious investor sentiment and weak participation.

The benchmark DSEX index dropped 42 points to close at 4,890, marking a second straight day of decline. Over the past two sessions, the index has shed a total of 73 points, while market capitalisation has eroded by around Tk5,800 crore, reflecting sustained risk aversion among investors.

The blue-chip DS30 index also suffered, shedding 14 points to settle at 1,877, indicating broad-based weakness across large-cap stocks. The SME platform mirrored the downtrend, with the DSMEX index slipping 24 points to close at 849.

Market breadth was decisively negative, as declining stocks far outnumbered gainers. Only 48 issues advanced, while 292 declined and 48 remained unchanged, highlighting the dominance of sellers throughout the session.

Trading activity also eased, as turnover declined 10% to Tk413 crore.

EBL Securities said in its daily market review, the capital bourse extended its losing streak for a second consecutive session as investor jitters surrounding the unfolding political situation induced a persistent broad-based selling pressure that weighed down the market indices amid broadly subdued market momentum.

Following a lacklustre opening, sellers maintained their control as the session progressed, which waned investor confidence further and triggered intensified selling in the latter half of the session that dragged most scrips into the negative territory, it added.

All major large-cap sectors closed in the red, further weighing on the indices. Non-bank financial institutions led the losses, as the sector declined by 1.77%. Engineering stocks followed, dropping 1.21%, while the fuel and power sector lost 0.97%. Banking shares slipped 0.82%, pharmaceuticals fell 0.80%, telecommunications declined 0.65%, and food and allied stocks shed 0.48%.

Despite the broader sell-off, a handful of stocks managed to post notable gains, largely driven by speculative interest and stock-specific factors.

Union Insurance emerged as the top gainer, rising 9.79%, followed by Prime Finance, which climbed 8.33%. Reliance One Mutual Fund advanced 7.38%, while Queen South Textile Mills and Wata Chemical gained 7.01% and 6.14% respectively.

On the losing side, several stocks faced steep corrections. Familytex dropped 7.69%, Asiatic Laboratories fell 6.36%, and both GSP Finance and Premier Leasing declined by 6.25% each. Bd Thai Aluminium also came under pressure, losing 5.93%.

The Chattogram Stock Exchange also closed lower, reflecting the broader bearish sentiment. The CSCX index dropped 48 points to settle at 8,477, while the CASPI index fell 76 points to close at 13,770.

Turnover at the port city bourse plunged sharply by 58% to Tk5.16 crore, underscoring weak investor participation outside Dhaka as well

Mobile financial service (MFS) provider Nagad has received the final approval from the Bangladesh Bank to operate its interoperable payment system.

A senior official of the Bangladesh Bank confirmed the development to The Business Standard, saying the approval was issued last week.

"The Bangladesh Bank has approved Nagad for operating the interoperable payment system. Hopefully, Nagad may start its interoperable services from January," the official said.

The central bank introduced the long-awaited interoperable payment system on 1 November, aiming to facilitate seamless digital transactions across platforms. However, at the time of launch, Nagad had not received regulatory approval, while market leader bKash also stayed out of the system.

Ahead of the launch, bKash sent a letter to the central bank on 30 October, stating that it could not ensure full security for integration with the National Payment Switch Bangladesh (NPSB). The company requested time until 31 January to join the system.

A senior central bank official said the Bangladesh Bank faced an awkward situation due to bKash's last-minute decision, as the company dominates the MFS market.

The interoperable payment system allows instant transfers between mobile wallets, bank accounts, non-bank accounts, and institutional accounts. Another Bangladesh Bank official said the initiative is part of the regulator's broader effort to promote a cashless society.

"Market-leading MFS providers should join the interoperable system to boost digital transactions in the country," the official said.

Officials also noted that the system would struggle to gain popularity without the participation of major players such as bKash and Nagad.

Nagad has been operating under Bangladesh Bank's administration since August last year following a regime change.

Previously, the service was excluded from interoperability on the grounds of not holding a approval, raising questions about how the central bank was overseeing its operations.

Bangladesh Bank has formally enabled account-to-account interoperability through NPSB by updating its regulatory framework to include banks, MFS providers, microfinance institutions, and payment service operators. The system now supports real-time clearing and multi-party settlement.

Despite regulatory preparedness, adoption of interoperability through NPSB has been slow, as providers remain concerned about high integration costs and unclear commercial benefits.

Bangladesh Bank has restructured its supervision framework by dissolving its existing onsite and offsite supervision departments and forming 14 new divisions to implement Risk-Based Supervision (RBS).

According to a letter signed by Jabdul Islam, director of the central bank's Human Resources Department, the previous 13 onsite and offsite supervision divisions at the head office have been abolished. In their place, 14 new divisions have been created under the RBS framework.

The newly formed divisions will begin operations from 1 January 2026, reads the letter seen by The Business Standard.

Under the new structure, 12 divisions have been created within the Bank Supervision Department (BSD). The remaining two divisions have been established under the Technology Risk and Digital Banking Supervision Department and the Supervisory Data Management and Analytics Department.

To support the Technology Risk and Digital Banking Supervision Department, several new ICT-related posts have been created, including one additional director (ICT), one joint director (ICT), two deputy directors (ICT), and two assistant directors (ICT).

In addition, new positions have been created for the Supervisory Data Management and Analytics Department, including one joint director (ICT), one deputy director (ICT), and one assistant director (ICT).

Bangladesh's import bill is growing faster than its export earnings, widening the current account deficit and putting renewed pressure on the country's external finances.

According to data released by Bangladesh Bank yesterday, the gap between money flowing out of the country and money coming in widened to $749 million during July-October of fiscal year 2025-26 (FY26).

The gap widened 17 percent from a $640 million shortfall recorded in the same period a year earlier.

Economists track this gap through what is formally known as the current account, which records a country's earnings and spending from trade in goods and services, income from overseas investments, remittances, and foreign aid. When payments for imports, investment income, or aid exceed receipts from exports and remittances, the account slips into deficit.

Speaking on condition of anonymity, a senior central bank official said import payments have been rising for several reasons, including higher demand ahead of Ramadan, pushing the external balance further into the red.

During the July–October period, import payments rose 5.5 percent year-on-year to $22.11 billion, compared with $20.95 billion in the same period last year.

In contrast, export earnings grew by just 1.8 percent to $14.54 billion, central bank data showed.

As a result, the gap between imports and exports, known as the trade deficit, widened to $7.57 billion in the first four months of FY26, up from $6.68 billion a year earlier.

Industry insiders warned that imports may climb further after the upcoming election, which could put additional strain on foreign currency balances.

They stressed the need to boost export earnings and remittance inflows to offset the rising import bill.

There was, however, some relief from financial inflows. Another key part of the balance of payments – the financial account, which tracks money coming in through foreign investment, loans, aid, and other financial transactions – returned to surplus.

In the July–October period, the financial account recorded a surplus of $2.17 billion, reversing a $499 million deficit in the same period last year. During July-September alone, it had posted a $1.66 billion deficit, indicating a sharp turnaround later in the quarter.

Net foreign direct investment also improved, rising to $445 million from $260 million a year earlier, according to the balance of payments data.

Overall, Bangladesh's balance of payments – which combines trade, income, and financial flows – recorded a surplus of $1.08 billion during the four-month period, compared with a $2.19 billion deficit in the same period last year.

At the end of October, the country's gross official foreign exchange reserves, measured under the IMF's BPM6 standard, stood at $27.57 billion, up from $19.83 billion a year earlier, Bangladesh Bank data showed.

Oil prices climbed on Monday as supply disruptions linked to escalating US-Venezuela tensions outweighed oversupply worries and the impact of a potential Russia-Ukraine peace deal.

Brent crude futures were up 33 cents, or 0.54%, at $61.45 a barrel, as of 0429 GMT, and US West Texas Intermediate crude was at $57.75 a barrel, up 31 cents, or 0.54%.

Both contracts slid more than 4% in the prior week, weighed down by expectations of a surplus in 2026.

"Peace talks between Russia and Ukraine have swung between optimism and caution, while tensions between Venezuela and the US are escalating, raising concerns about potential supply disruptions," said Tsuyoshi Ueno, a senior economist at NLI Research Institute.

"Still, with markets lacking clear direction, oversupply concerns remain strong and unless geopolitical risks escalate sharply, WTI could fall below $55 early next year."

Venezuela's oil exports have fallen sharply since the United States seized a tanker earlier last week and imposed fresh sanctions on shipping companies and vessels doing business with the Latin American oil producer, according to shipping data, documents and maritime sources.

The market is closely monitoring developments and their impact on oil supply, with Reuters reporting that the US plans to intercept more ships carrying Venezuelan oil following this week's tanker seizure, intensifying pressure on President Nicolas Maduro.

Rising expectations of a surplus, however, continued to weigh on prices.

JPMorgan Commodities Research said in a note on Saturday that oil surpluses in 2025 are expected to widen further into 2026 and 2027, as global oil supply is projected to outpace demand, expanding at three times the rate of demand growth through 2026.

Ukrainian President Volodymyr Zelenskiy offered to drop his country's aspiration to join the NATO military alliance as he held five hours of talks with US envoys in Berlin on Sunday. Negotiations are set to continue on Monday.

US envoy Steve Witkoff said "a lot of progress was made," though additional details were not divulged.

Ukraine's military said on Friday that it attacked a major Russian oil refinery in Yaroslavl, northeast of Moscow; industry sources said the facility had suspended output.

Russian state oil and gas revenue in December is likely to fall by nearly half from a year earlier to 410 billion roubles ($5.12 billion) due to lower crude prices and a stronger rouble, Reuters calculations showed on Friday.

A possible peace deal could eventually increase Russian oil supply, which is currently sanctioned by Western countries.

On the supply side, US energy firms last week cut the number of oil and natural gas rigs operating for a second time in three weeks, energy services firm Baker Hughes said on Friday.

Bangladesh Bank purchased $141.50 million from 13 commercial banks today as part of its ongoing intervention in the foreign exchange market.

The central bank bought the dollars at exchange rates ranging from Tk 122.29 to Tk 122.30 per US dollar, with Tk 122.30 set as the cut-off rate, according to officials familiar with the transaction.

With the latest purchase, Bangladesh Bank's total dollar acquisition in December 2025 so far has reached $624.50 million.

Cumulatively, the central bank has bought $2.80 billion in the current 2025-26 fiscal year to date.

Industry insiders said the continued dollar purchases indicate a relatively comfortable foreign exchange position, driven by improved inflows from exports and remittances.

The move is also helping the central bank manage excess liquidity in the interbank foreign exchange market.

Bangladesh Bank has been following a market-based exchange rate regime, intervening periodically to smooth volatility and maintain stability in the taka-dollar market.

Global shipments of thermal coal - burned in power stations - have posted their first annual decline since 2020 on the back of lower coal-fired power generation in key Asian markets.

Total seaborne exports of so-called steam coal are set to come in at about 945 million metric tons in 2025, marking a 5 percent or roughly 50 million ton drop from 2024, data from commodities intelligence firm Kpler shows.

A 7 percent drop in imports by countries in Asia - the top coal consuming region - was the main driver of the decline, and raises the possibility that global coal export volumes have peaked and may continue to contract going forward.

Countries in Asia accounted for 89 percent of all thermal coal imports for the year to date, which underscores how concentrated coal shipments have become.

They imported 841 million tons of thermal coal, marking a 7 percent or 60 million ton drop from 2024's totals.

China was the top overall coal importer this year, with roughly 305 million tons of imports, followed by India (157 million tons), Japan (100 million tons), South Korea (76 million tons) and Vietnam (45 million tons).

However, only two of the five largest coal import markets - South Korea and Vietnam - posted annual rises in imports this year, which highlights the downbeat tone of coal demand even in the top coal consuming region.

And while other importers including Malaysia, Thailand and Turkey also posted year-over-year growth, their collective imports remain dwarfed by both China's and India's, which remain the main driving forces behind global coal import trends.

The two largest coal importers - China and India - accounted for 48 percent of all thermal coal imports, and both registered import contractions this year due to a combination of higher domestic coal production and greater power supplies from other sources.

China registered a 12 percent or nearly 43 million ton drop in thermal imports in 2025 from the year before, to 305 million tons. India's imports dropped by 3 percent or by 4.3 million tons to around 157 million tons.

Both China and India have government policies that support domestic coal production, which generates jobs, but both countries also face the threat of overproduction of low-grade coal supplies that raise pollution levels when burned.

China's economy stalled in November, according to several key indicators, as worries about its property sector are back in the headlines.

China's ongoing campaign against overcapacity is likely to lead to some shrinkage in domestic coal production volumes in the years ahead, and in turn may limit any further drops in coal import demand over the near to medium term.

However, China's rapid rollout of clean energy supplies - including record deployment of solar and wind power and rising generation from nuclear reactors - is expected to continue shrinking coal's share of the domestic power generation mix.

Indeed, coal's share of electricity production in China has fallen to a record low of 55.3 percent so far in 2025, which is down from nearly 59 percent in 2024, data from energy think tank Ember shows.

In India, a combination of record domestic coal mine production and declining coal use in electricity generation have resulted in the rare issuance of coal export permits.

Those export permits look set to heighten competition among exporters from early 2026, and could become a regular occurrence if the mine output increases can be sustained while domestic use of coal for electricity generation continues to contract.

Coal has generated just under 70 percent of India's electricity so far in 2025, which compares to a more than 77 percent share during the past two years.

Coal's loss of India's generation share has come as a direct result of a record-fast rollout of power supplies from solar and wind farms, as well as the highest generation from hydro dams in more than six years.

With clean generation from all sources expected to keep climbing on the back of an ongoing push to expand India's clean power capacity, further cuts to both coal's share of the generation mix and total coal use in India could emerge.

That in turn may lead to even higher coal exports from India over the near term, which may eat into the profit margins of other coal exporters such as Indonesia and Australia.

But over time any sustained declines in coal use in China, India and other formerly major coal consumers will likely trigger steady shrinkage in coal export volumes as well, and result in a broader contraction of the overall coal industry.

China's retail sales grew last month at their slowest pace in nearly three years, official data showed Monday, underlining the tough battle leaders face in kickstarting consumption in the world's number two economy.

Beijing has in recent years sought to revive sentiment in the domestic economy, which has been battered by a prolonged debt crisis in the country's vast property market.

Reversing the slump has become a top priority for leaders, who have vowed repeatedly to boost weak activity at home even as exports to the rest of the world boom.

Retail sales, a key indicator of consumption, edged up 1.3 percent year-on-year in November, the National Bureau of Statistics (NBS) said -- the weakest pace since December 2022, when stringent zero-Covid measures ended.

The reading was also well short of a Bloomberg forecast of 2.9 percent, which was the same as October's figure.

Monday's data "point to broad-based weakness in domestic activity", wrote Zichun Huang of Capital Economics in a note.

"Policy support should help drive a partial recovery in the coming months, but this probably won't prevent China's growth from remaining weak across 2026 as a whole," she said.

Despite the spending slump, China's economy has been supported by robust exports, which have remained resilient in the face of this year's fierce trade war with the United States.

The boom in shipments has kept production humming in the manufacturing powerhouse, which has already reached a historic trade surplus of more than $1 trillion this year.

But the official data showed Monday that factory activity growth weakened last month, with industrial production sliding to 4.8 percent year-on-year -- the slowest in more than a year.

That figure narrowly missed a Bloomberg forecast of five percent and was also slightly down from 4.9 percent in October.

"External demand for Chinese goods appears to be picking up... but that was offset by weakness in domestic demand," wrote Huang.

In a further sign of mounting pressure this year, fixed-asset investment through the end of November was down 2.6 percent compared with the same period in 2024, the NBS said Monday.

Leaders last week held a key meeting focused on the economy at which they pledged to boost consumption, stabilise the property market and create more employment opportunities, state media reported.

The annual closed-door discussions see officials deliberate core economic strategy for the year ahead, though specific policy announcements are not typically made.

Economists have long called for Beijing to shift towards a growth model powered more by domestic spending than traditional engines of past decades like exports and manufacturing.

The official data Monday showed that spenders remain cautious.

The price of homes -- a key store of wealth for Chinese households -- continued to drop.

New residential property prices in 64 out of 70 major cities surveyed by the NBS fell last month year-on-year.

"The contraction of fixed-asset investment and the drop of property prices in recent months have been transmitted to the consumer sentiment," wrote Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, in a note reacting to Monday's data.

"I expect fiscal and monetary policies to be loosened somewhat in (the first three months of next year) to stabilise the economic momentum," he said.

The country's surveyed unemployment rate stood at 5.1 percent in November, official data showed Monday, unchanged from the previous month.

Seventeen domestic banks have managed to keep their balance sheets relatively clean, with non-performing loans (NPLs) below 10 percent, at a time when most of their market peers are struggling with soaring bad debt, according to central bank data.

The lenders are City Bank, Prime Bank, BRAC Bank, Pubali Bank, Eastern Bank, Mutual Trust Bank, Midland Bank, Meghna Bank, Shahjalal Islami Bank, Dhaka Bank, Jamuna Bank, NCC Bank, Trust Bank, Uttara Bank, Bengal Commercial Bank, Community Bank and Citizens Bank.

Currently, there are 52 local banks in the country, while the industry average NPL stands at 36 percent.

Industry insiders said these 17 banks limited bad loans through cautious lending, stronger credit risk assessment, diversified loan portfolios, close monitoring of borrowers, and timely recovery efforts, even as widespread corruption weakened asset quality across much of the sector.

They said improved corporate governance and a focus on quality growth rather than aggressive expansion also played a key role.

Some newer banks, with smaller loan portfolios, benefited from lower default exposure compared with older lenders burdened by legacy loans.

Among the seventeen banks, newly licensed Citizens Bank posted the lowest NPL ratio at 1.74 percent, while Jamuna Bank recorded the highest within the group at 9.06 percent as of September this year.

According to the central bank data, NPLs at City Bank, Prime Bank, Eastern Bank, BRAC Bank and Bengal Commercial Bank are below five percent.

At the end of September this year, City Bank reported its non-performing loans at Tk 2,439 crore, equivalent to 4.76 percent of its total disbursement.

Mashrur Arefin, managing director of City Bank, said that the bank's NPL ratio stood at 3.6 percent in 2024, well below the industry average. "In 2025, it is expected to fall further to below 3 percent."

"This improvement reflects the bank's strong and disciplined governance framework, where credit decisions are made professionally with no interference from the board, and where business and credit risk are two completely separate functions," he told The Daily Star.

According to Arefin, a well-diversified loan portfolio reduces concentration risk, while effective credit control systems allow for close monitoring of accounts.

Proactive recovery initiatives, timely provisioning, and strong capital and liquidity management have further strengthened asset quality, he said, adding that these factors enable City Bank to manage NPLs sustainably despite a challenging banking environment.

Ali Reza Iftekhar, managing director and CEO of Eastern Bank, said that the commercial lender's NPLs have remained around 3 percent for the last 33 years.

"We carefully screen and assess clients at the onboarding stage. In addition, we keep them under continuous and strong monitoring, which is why our NPL ratio remains low."

The CEO said the bank has a large recovery team organised on a bucket-wise basis. One team handles loans delayed by one to 30 days, while another takes over when delays exceed that period.

"Each team works independently, and there is a separate legal team as well. This is how we conduct our banking operations," he added.

Until September this year, Prime Bank's total disbursed loans stood at Tk 32,784 crore, of which Tk 1,316 crore became defaulted, representing only 4.01 percent.

"All our credit proposals are vetted for financial viability and sustainability at the time of approval," said Hassan O. Rashid, chief executive officer of Prime Bank.

He added that after disbursement, the bank monitors the loan and business performance of borrowers closely. "We avoid sectors where NPLs are high and put a lot of effort into recovery."

At the end of September this year, defaulted loans at BRAC Bank stood at Tk 2,401 crore, or 3.58 percent of its total disbursed loans.

The bank's board consists of eight directors, seven of whom are independent. It also includes economists, bankers, and other experienced professionals, establishing BRAC Bank as a strong institution.

"BRAC Bank's owners do not interfere in management, while the board formulates policy and management handles operations," said Tareq Refat Ullah Khan, managing director and CEO of the bank.

He told The Daily Star that BRAC Bank places strong emphasis on its recovery department, which is weak in many other banks.

"We recruit experienced professionals in this area because recovery is one of our core priorities. In addition, we give opportunities to problematic borrowers by allowing them to continue their businesses, which helps us in loan recovery."

At the end of September, NPLs at Mutual Trust Bank stood at Tk 3,553 crore, or 6.83 percent of total disbursed loans.

Syed Mahbubur Rahman, managing director and CEO, said that the bank follows proper procedures when disbursing loans.

"We did not act on anyone's recommendation or instruction," he told The Daily Star, adding that even the board did not influence management activities. "That is why we have been able to keep our NPLs low."

He said the bank declined many seemingly viable projects because the assessment suggested problems with the sponsors' repayment behaviour and planning.

"We did not sanction loans under any influence. Loans are approved based on documentation reviewed by each department separately. The board and management of the bank do not tolerate any conflict of interest," added Rahman.

In a light-filled workshop in eastern China, a robotic arm moved a partially assembled autonomous vehicle as workers calibrated its cameras, typical of the incremental automation being adopted even across smaller factories in the world's manufacturing powerhouse.

China is already the world's largest market for industrial robots, and the government is pouring billions of dollars into robotics and artificial intelligence to boost its presence in the sector.

The first essentially humanless factories are already in operation, even as widespread automation raises questions about job losses as well as the cost and difficulty of transition for smaller and medium-sized companies.

The answer for many is a hybrid approach, experts and factory owners told AFP.

At the autonomous vehicle workshop, manager Liu Jingyao told AFP that humans are still a crucial part of even technologically advanced manufacturing.

"Many decisions require human judgement," said Liu, whose company Neolix produces small van-like vehicles that transport parcels across Chinese cities.

"These decisions involve certain skill-based elements that still need to be handled by people."

At the Neolix factory, 300 kilometres (186 miles) north of Shanghai, newly built driverless vehicles zoomed around a testing track simulating obstacles including puddles and bridges.

In a closed-off room, workers assembled vehicles' "brains", testing their cameras and computer chips.

"Automation... primarily serve(s) to assist humans, reducing labour intensity rather than replacing them," Liu said.

But Ni Jun, a mechanical engineering expert at Shanghai's Jiaotong University, said China's strategy of focusing on industrial applications for AI means full automation is already feasible in many sectors.

Among others, tech giant Xiaomi operates a "dark factory" -- where the absence of people means no need for lights -- with robotic arms and sensors able to make smartphones without humans.

Ni described a "digital divide" between larger companies with the funds to invest heavily in modernisation, and smaller businesses struggling to keep up.

For Zhu Yefeng's Far East Precision Printing Company, part of China's vast network of small independent factories employing up to a few dozen people each, full automation is a distant dream.

At the company just outside Shanghai, workers in small rooms fed sheets of instruction manuals into folding machines and operated equipment that printed labels for electronic devices.

The company used pen and paper to track its workflow until two years ago, with managers having to run around the factory to communicate order information.

"Things were, to put it bluntly, a complete mess," Zhu told AFP.

The company has since adopted software that allows employees to scan QR codes that send updates to a factory-wide tracker.

On a screen in his office, Zhu can see detailed charts breaking down each order's completion level and individual employees' productivity statistics.

"This is a start," Zhu told AFP. "We will move toward more advanced technology like automation, in order to receive even bigger orders from clients."

Financial constraints are a major barrier though.

"As a small company, we can't afford certain expenses," said Zhu.

His team is trying to develop its own robotic quality testing machine, but for now humans continue to check final products.

The potential unemployment caused by widespread automation will be a challenge, said Jacob Gunter from the Berlin-based Mercator Institute for China Studies.

"Companies will be quite happy to decrease their headcount... but the government will not like that and will be under a lot of pressure to navigate this," Gunter told AFP.

Beijing's push to develop industrial robots will "intersect with the need for maintaining high employment at a time when employment pressure is considerable", he added.

Going forward, manufacturers must strike a balance "between the technical feasibility, social responsibility, and business necessity", Jiaotong University's Ni told AFP.

Zhou Yuxiang, the CEO of Black Lake Technologies -- the start-up that provided the software for Zhu's factory -- told AFP he thought factories would "always be hybrid".

"If you ask every owner of a factory, is a dark factory the goal? No, that's just a superficial description," Zhou said.

"The goal for factories is to optimise production, deliver things that their end customers want, and also make money."

Bangladesh's garment exports to non-traditional markets such as Australia, India, South Korea and Russia have declined sharply, with overall shipments to these destinations falling by more than 3% in the first five months of the current fiscal year.

This comes even as shipments to some traditional markets showed slight growth.

Data from the Export Promotion Bureau (EPB) show that from July to November of the fiscal 2025-26, garment exports to non-traditional markets dropped by 3.39% compared with the same period a year earlier.

The fall has been steeper in several of the larger non-traditional destinations, such as Australia, India, South Korea, Russia, Turkey and Mexico, according to data.

Industry insiders say the slowdown in global consumer demand, weak marketing efforts by both the government and the private sector, a lack of product diversification in line with market demand, and reduced government incentives for exports to these markets have all contributed to the decline.

RMG exporters support relaxed FOC rules, local suppliers raise investment and value addition concerns

Around 16% of Bangladesh's total garment exports go to non-traditional markets, which include about 15 major countries outside the United States, the United Kingdom, Canada and the 27-member European Union.

These markets have long been seen as crucial for reducing reliance on traditional destinations.

Sharp drops in key destinations

An analysis of EPB data suggests that while garment exports to traditional markets are also facing pressure, the rate of decline has been higher in non-traditional markets.

Exports to India fell by more than 8% during the five-month period. Bangladesh shipped garments worth $298m to India between July and November, $26m less than in the same period of the previous financial year.

Australia, the largest non-traditional export destination for Bangladesh garments, saw exports drop by 10% year-on-year to $313m during the period.

Exports also fell sharply in other non-traditional markets, declining by 12% in South Korea, 16% in Mexico, 25% in Turkey and 23% in Russia.

However, garment exports increased in some newer or non-traditional markets, including Brazil, China, Japan, Malaysia, the United Arab Emirates and South Africa.

China sharply losing US apparel market; Bangladesh, Vietnam and India major gainers: Report

Shehab Udduza Chowdhury, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told The Business Standard, "Overall, our export performance is not good. The situation is worse in non-traditional markets mainly because of weak marketing, a lack of continuous communication and follow-up, and reduced incentives."

He said Bangladesh has been unable to match China's aggressive marketing strategies in markets such as South Korea and Japan. He also criticised the performance of commercial wings at Bangladeshi missions abroad, saying they have not met expectations.

"There was once a 5% cash incentive to encourage exports to new markets, which has now been reduced to just 2%. This has discouraged exporters and is one of the reasons behind the decline," he added.

Bangladesh must align with EU Green Deal by 2030 to safeguard RMG exports: Experts

Former BGMEA director Mohiuddin Rubel echoed similar concerns, saying Bangladesh's failure to develop products in line with market demand and its weak marketing efforts remain key challenges.

Mixed picture in traditional markets

EPB data show a mixed trend in traditional markets. Garment exports to the United States, Bangladesh's single largest destination, rose by 3% in the July-November period to $3.22 billion, up from $3.13 billion a year earlier.

Exports also increased by 6.51% to Canada and by 3% to the United Kingdom.

Within the European Union, exports grew to Spain, Poland and the Netherlands. However, shipments declined to Germany – the second-largest single-country destination for Bangladeshi garments – as well as to France, Denmark and Italy.

A government move gets underway for revising the fee structure for state guarantees against both foreign and domestic loans to introduce a risk-based pricing mechanism to reduce fiscal exposure and strengthen financial discipline in borrowing institutions.

Officials say the move is intended to better reflect credit risk while safeguarding public finances from mounting contingent liabilities.

The decision was made at the 55th meeting of the Cabinet Committee on Debt Management (CDMC), amid concerns over a rapid buildup of government-underwritten loans.

As of the end of September 2025, outstanding state guarantees exceeded Tk 1.11 trillion, underscoring the need for a more structured and sustainable framework.

Of this amount, Tk 660.36 billion was issued against foreign-currency loans and Tk 453.65 billion covered local-currency loans, according to a government document.

While policymakers broadly agree on the principle of rationalising guarantee fees, discussions are ongoing as to how to balance fiscal prudence with the need to keep borrowing affordable for sectors socially and economically sensitive.

Officials say under the State Guarantee Guidelines 2018, new loan agreements require an assessment of the justification for government guarantees and their potential fiscal impact.

At a recent CDMC meeting, two types of guarantee fees were proposed. A one-time base fee of 0.25 per cent would apply to all institutions, with an additional premium based on the borrower's creditworthiness rating.

Institutions with strong credit ratings would pay an extra 0.25 per cent, those with medium ratings 0.5 per cent, and low-rated entities up to 1.0 per cent.

The committee also recommends creating a dedicated fund from collected guarantee fees to strengthen risk management and provide fiscal safeguards in the event of loan defaults.

Such a fund would help the government manage potential liabilities arising from guaranteed loans.

Subsequently, an inter-ministerial meeting was held on October 27, 2025, involving representatives from key ministries, including finance, commerce, power, energy, transport, agriculture, textiles, and telecommunications.

While most participants agreed in principle that guarantee fees should be rational and risk-based, several raised concerns that higher fees could increase borrowing costs, particularly in critical sectors such as agriculture and food, with possible negative social impacts.

The committee notes that, "rather than relying solely on credit ratings, institutional financial capacity and overall risk exposure should also be taken into account when determining guarantee fees".

Also recommended that, at this stage, guarantee fees be applied as a one-time charge at a standard rate of 0.25 per cent of the guaranteed amount, without annual charges or additional risk premiums.

An official says "The relevant ministry would need approval from the appropriate authorities before implementing any revised guarantee-fee framework, with the aim of balancing fiscal discipline with sectoral growth and social considerations."

Jute goods exports have started to recover after four years of consistent decline, as demand for the once golden fibre in major markets has increased, raising hopes among millers of a sustained rebound.

Bangladesh recorded 1.36 percent year-on-year growth, reaching $346 million in exports during the July-November period of the fiscal year (FY) 2025-26, according to Export Promotion Bureau.

Exporters said the recovery in demand in Turkey, the key market for jute yarn, along with the prospect of interest rate cuts by major economies, easing tensions in the Middle East, and ongoing talks to end the Russia-Ukraine war, has created optimism about economic prospects.

Recovery began in July, following an overall export decline of 4 percent in FY2024-25, after a consistent drop in shipments from a historic high of $1.16 billion in FY2020-21.

"We see increased orders from Turkey and some other countries. This has created hopes of revival," said Tapash Pramanik, chairman of the Bangladesh Jute Spinners Association (BJSA), the trade body of yarn producers.

Millers said the sector suffered from sluggishness due to the continued decline in exports.

"There had been frustration among millers in the sector. It was difficult to sell jute goods," Pramanik said. "Now we see improvement in sales of hessian, sacking and yarn."

Between FY2021 and FY2025, the jute industry, built on locally produced natural fibre, lost 29 percent of exports, as many buyers switched to synthetic and regenerated cotton yarn due to high domestic prices of the fibre.

Industry stakeholders said demand for jute yarn began to decline after the Covid-19 pandemic in 2021, when prices of locally grown raw jute shot up to Tk 5,500-Tk 6,000 per maund (around 37 kilogrammes).

This year, jute prices are Tk 4,200-Tk 4,300 per maund and have remained stable after the government in September restricted raw jute exports to contain prices that had risen owing to a fall in production.

"Because of the export restriction, we have been able to export jute goods at almost stable prices. On the other hand, as prices are high in India, exports from there have reduced," said Helal Ahmed, deputy managing director of AkijBashir Group, one of the leading jute exporters.

He added that the imposition of a 50 percent reciprocal tariff on India's exports by the United States created scope for local jute goods manufacturers to expand in the American market.

"Shipment of various types of fabric has increased in the US," he said.

With Turkey being the major buyer of carpet yarn and rope twine, the Netherlands, Italy, China, India, Uzbekistan, Indonesia, Tanzania, Sudan and countries in the Middle East have also been major buyers.

"There is demand for potato bags, hessian bags, linoleum cloth, nursery cloth and diversified yarn/twine in mini spools and balls for decorative and gardening purposes in the European Union and the United Kingdom," he said.

"We expect the current trend to continue," Ahmed added. BJSA Chairman Pramanik said monthly average exports were 40,000 tonnes last year, and the volume of shipments is expected to rise this year.

Abdul Barik Khan, secretary general of the Bangladesh Jute Mills Association (BJMA), said exports are growing in some new markets and called for government policy support to facilitate further growth.

"Low-cost loans and incentives to explore new markets will be helpful," he said.

Pramanik added that the interest rate on loans is very high up to 15.5 percent.

"It is difficult to conduct business while paying such high interest on loans," he said.

"The government should engage with us and provide policy support so that we can increase exports."

Bangladesh's tax-to-GDP ratio remains among the lowest in Asia, stuck at around 8-9 percent. This persistent weakness limits the state's capacity to invest in infrastructure, education, healthcare, energy and social protection. Public debate often focuses on taxing the wealthy or closing loopholes for large corporations. Yet an overlooked but critical challenge lies elsewhere: the vast number of small shop owners, traders and micro-entrepreneurs who remain outside the tax net.

For millions of small businesses across Bangladesh, from neighbourhood grocers to clothing retailers and roadside vendors, tax compliance is not just a financial burden but an administrative one. Filing an income tax return often requires professional help. VAT compliance is even more daunting. Record keeping, digital submissions and documentation standards make VAT practically inaccessible to the typical small trader operating with minimal staff and modest turnover. Unsurprisingly, most simply avoid the system altogether.

Yet these small enterprises account for a large share of the economy. The informal sector contributes more than one-third of GDP and employs the majority of the labour force. A tax system that fails to include this segment will always struggle to raise adequate revenue. This is compounded by the reality that Bangladesh's revenue administration lacks the manpower and technological capacity to monitor or audit millions of micro businesses. Expecting universal compliance under the current framework is unrealistic. Any workable tax policy must align with administrative capacity.

A practical solution, used successfully by many countries, is a flat rate, simplified tax and VAT regime for small businesses. Such systems sharply reduce compliance costs and encourage voluntary participation. India's GST Composition Scheme, which allows small businesses to pay a low fixed percentage of turnover with minimal paperwork, brought millions of traders into the formal tax base. Similar models in Indonesia, Pakistan, Turkey, Brazil and Kenya show that simplified taxation broadens the tax net far more effectively than complex, documentation-heavy systems.

A simplified model for Bangladesh could work in three parts. First, a fixed annual income tax could be set by shop size, turnover category or location. Second, a fixed VAT amount could be determined using the same criteria, removing the need for complex Mushak forms. Third, optional digital payment incentives could encourage early or consistent compliance.

Such a system would remove the need for accountants, reduce the fear of audits and make paying tax almost as simple as paying a utility bill. Even modest payments from millions of small traders would meaningfully expand national revenue. More importantly, a simplified self-reporting system would ease pressure on the revenue authority, lowering the need for additional manpower and reducing scope for arbitrary enforcement.

Simplification, however, must be matched with fair but firm enforcement. Once the state offers an easy way to comply, persistent evasion cannot be ignored. Strict penalties are needed to prevent large firms from splitting into smaller units to qualify for lower rates. Penalties must be clear and predictable, avoiding arbitrary actions that push businesses deeper underground. Balance matters. Heavy-handed enforcement fuels fear and corruption, while transparent enforcement supports long-term behavioural change. Policymakers should also resist the temptation to gradually raise flat tax rates.

Bangladesh does not need a perfect tax system. It needs a practical, inclusive and administratively simple one. A low burden flat rate tax scheme for small traders is among the most achievable reforms available. It is fair, efficient and better suited to the structure of the economy than the current one-size-fits-all model.

If Bangladesh is serious about sustainable development, stronger public services and lower reliance on debt, expanding the tax base is essential. Simplifying taxation for small traders may be the single most effective step towards that goal. A tax system people can understand and afford is one they are far more likely to join.

The writer is chairman of Unilever Consumer Care Ltd

Global Heavy Chemicals Limited has incurred a loss of Tk6.10 crore in the first quarter of the current fiscal year due to a sharp decline in sales and increasing fixed and financial expenses.

However, the net loss for the July–September 2025 quarter narrowed compared with the same period of the previous fiscal year. In the first quarter of FY25, the company posted a loss of Tk7.92 crore, according to disclosures.

In a filing with the stock exchanges today (14 December), the company said the continued losses stemmed from a steep fall in net sales to Tk2.19 crore from Tk17.13 crore a year earlier, while fixed costs and financial expenses rose to around Tk3 crore.

That is why, the company reported a net loss of Tk6.1 crore keeping earnings per share (EPS) negative despite a marginal improvement, it said.

Its net asset value per share stood at Tk71.05, and net operating cash flow per share at Tk0.85 in Q1 of FY26, compared with Tk71.89 and Tk0.61 respectively in the same time of the previous fiscal year.

The company said that the net asset value dropped slightly primarily due to the net loss and a reduction in retained earnings, while share capital, share premium, and reserves remained unchanged.

Despite the loss, cash flow from operations improved, supported by effective working capital management, including lower receivables and inventories and higher payables. These measures increased net cash from operating activities to Tk6 crore from Tk4 crore year-on-year.

In the last fiscal year, the company incurred a loss of Tk15.76 crore and, due to the continued losses, did not recommend any dividend for shareholders for FY25.

First Security Islami Bank, once controlled by the scam-hit S Alam Group, has reported an unprecedented consolidated loss of Tk57,576 crore for the January-September 2025 period after the Bangladesh Bank withdrew a long-standing regulatory deferral facility and ordered the lender to recognise its full provision shortfall.

The staggering loss was disclosed in the bank's revised unaudited financial statements, filed with the Dhaka Stock Exchange (DSE) following a directive from the central bank.

The revision marks one of the largest losses ever reported by a Bangladeshi bank and effectively confirms the institution's insolvency ahead of its merger into a new consolidated Islamic bank.

According to the revised statements, the bank's consolidated loss per share stood at Tk462.57 for the July-September quarter of 2025, compared with Tk0.26 in the same quarter a year earlier. For the nine months to September 2025, the consolidated loss per share ballooned to Tk476.57, reversing an earnings per share of Tk0.48 reported in the corresponding period of 2024.

The bank said the revision followed a Bangladesh Bank letter dated 25 November 2025, which withdrew the previously granted deferral facility that allowed the lender to prepare financial statements without fully adjusting for provision shortfalls against classified loans and investments.

A senior bank official, speaking on condition of anonymity, told TBS that the Bangladesh Bank recalculated the lender's actual losses by fully accounting for bad loans and impaired investments, particularly in light of the bank's impending merger. "The earlier figures did not reflect the true financial position because provisions were deferred. Once those adjustments were made, the real extent of losses became visible," the official said.

Previously, the bank had disclosed a consolidated loss of Tk3,750 crore for January-September 2025, prepared under the deferral facility.

Even more alarming, consolidated net asset value per share plunged to Tk460.18 negative as of 30 September 2025, from Tk20.66 a year earlier.

Banking analysts say such a deeply negative NAV is a clear indicator of insolvency. It implies that the bank's liabilities exceed its assets by a wide margin, leaving no residual value for shareholders.

"In practical terms, the equity of First Security Islami Bank is wiped out. Even if all assets were liquidated, they would not be enough to meet depositor and creditor claims," said a senior analyst at a Dhaka-based brokerage.

The roots of the crisis lie in the bank's massive volume of classified loans and investments. At the end of 2024, classified loans stood at Tk55,920 crore, accounting for about 92% of total loan outstanding.

The provision shortfall against these classified investments amounted to Tk47,862 crore. Despite this, the bank had earlier received regulatory approval to prepare its 2024 financial statements using the deferral facility, effectively masking the true scale of losses.

In early November, the central bank declared First Security Islami Bank ineffective and appointed an administrator, announcing that it would be merged with four other Islamic banks – Social Islami Bank, EXIM Bank, Union Bank and Global Islami Bank – into a new entity named Sammilito Islami Bank.

Following the announcement, trading of First Security Islami Bank shares was suspended on 6 November. While the delisting process has yet to begin, the fate of shareholders has already been sealed, according to the regulator.

At the merger announcement event on 5 November, Bangladesh Bank Governor Ahsan H Mansur said shares held by sponsor directors and general shareholders of the five merging Islamic banks were effectively valued at zero. "Shareholders will not get any compensation as the net asset value against the Tk10 face value has become negative, in some cases exceeding Tk450 per share," he said.

The situation mirrors developments at Union Bank, which earlier revised its own financials to report a loss of Tk25,794 crore and a negative net asset value of Tk237.44 per share.