The International Monetary Fund again edged its 2026 global growth forecast higher on Monday (19 January) as businesses and economies adapt to US tariffs that have eased in recent months and a continued AI investment boom that has fueled asset wealth and expectations of productivity gains.

The IMF in its World Economic Outlook update forecast global GDP growth at 3.3% in 2026, up 0.2 percentage point from its last estimate in October. That's even with 3.3% growth in 2025, which will also beat the October estimate by 0.1 percentage point, the IMF said.

The global crisis lender forecast 2027 growth at 3.2%, unchanged from the previous forecast. It has revised global growth rates higher since last July in response to trade deals that have reduced President Donald Trump's tariff rates that peaked in April 2025.

"We find that global growth remains quite resilient," IMF chief economist Pierre-Olivier Gourinchas told reporters, adding that the Fund's 2025 and 2026 growth forecasts now exceed predictions made in October 2024, before Trump was elected to a second term.

"So, in a sense, the global economy is shaking off the trade and tariff disruptions of 2025 and is coming out ahead of what we were expecting before it all started," Gourinchas said.
A digital illustration of the map of Bangladesh with a green upward-trending arrow and bar chart, alongside stacks of Bangladeshi Taka currency, symbolizing economic growth.

He said businesses have been able to adapt to higher US tariff rates by rerouting supply chains, while trade agreements have lowered some duties and China has shifted exports to non-US markets. The latest IMF forecasts assume an effective US tariff rate of 18.5% down from about 25% in the Fund's April 2025 forecast.

The IMF estimated US growth for 2026 at 2.4%, up 0.3 percentage point from October, due in part to a big push from massive investment in artificial intelligence infrastructure including data centers, powerful AI chips and power. The IMF edged its 2027 growth forecast a tenth of a point lower to 2.0%.

The IMF also said technology investment was boosting activity in Spain, which saw 0.3 percentage point upgrade to its 2026 GDP forecast to 2.3%, and in Britain, where the IMF kept its forecast unchanged at 1.3% for 2026.

Gourinchas said the AI boom poses risks for heightened inflation if it continues at its breakneck pace. But he added that if expectations that AI-driven productivity gains and profits are not realised, this could spark a correction in high market valuations that could crimp demand.

The IMF report lists AI as among risks that are tilted to the downside, along with disruptions to supply chains and markets from geopolitical tensions as well as new flare-ups in trade tensions.

A Supreme Court decision against Trump's broad tariffs under an emergency sanctions law, expected in coming days or weeks, "would inject another dose of trade policy uncertainty into the global economy" if Trump resurrects new tariffs under other trade laws, Gourinchas said.

But the IMF said that AI represents significant upside for the global economy if the investment surge leads to rapid adoption and productivity gains are realized and boost business dynamism and innovation.

"As a result, global growth may be lifted by as much as 0.3 percentage points in 2026 and between 0.1 and 0.8 percentage points per year in the medium-term, depending on the speed of adoption and improvements in AI readiness globally.

Among forecasts for other major economies, the IMF said China's 2026 growth would reach 4.5%, down from a stronger-than-expected 5.0% performance in 2025, but 0.3 percentage point higher than October estimates. The upgrade reflects a 10 percentage-point reduction in US tariff rates on Chinese goods for a year as well as continued diversion of exports to other markets such as Southeast Asia and Europe.

Gourinchas said that China risks running into more protectionist trade policies unless it develops a more balanced growth model that relies less on exports and more on internal demand.

Bangladesh economy to grow 4.6%, inflation to ease to 7.1% in FY26: UN report

The IMF forecast euro zone growth at 1.3% for 2026, up 0.1 percentage point from the October estimate, driven by increased public spending in Germany and stronger performances in Spain and Ireland. The Fund kept its 2027 euro zone growth forecast unchanged at 1.4%, noting that planned European increases in defence spending would materialise only in later years.

Japan also saw a slight upgrade to 2026 growth due to its new government's fiscal stimulus package, but Brazil was a notable outlier to the improvement trend, with a 0.3 percentage point reduction in its 2026 growth rate to 1.6% since October. IMF officials attributed the downgrade largely to tighter monetary policy needed to fight a flare-up in inflation last year.

The IMF said that globally, inflation was forecast to continue to decline, from 4.1% in 2025 to 3.8% in 2026 and 3.4% in 2027. Gourinchas said this leaves room for more accommodative monetary policy that will help underpin growth.

Commercial banks will have no alternative but to increase loan disbursement to the private sector as excess liquidity continues to build up in the banking system, Bangladesh Bank Governor Ahsan H Mansur said today (19 January).

He made the remarks while speaking at a seminar titled "Systematic Efforts to Understand Economic Pulse: Importance of Purchasing Managers' Index (PMI)" as the chief guest.

Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) and Policy Exchange Bangladesh (PEB) jointly organised the discussion at MCCI's Gulshan office.

James Goldman, deputy high commissioner and development director, British High Commission to Bangladesh, was the special guest at the seminar.

The governor said the deposit growth was 6.40% in December 2024 when the total deposit portfolio was Tk18 trillion.

He said that it means an additional liquidity amounting to Tk1.20 trillion was injected into the money market in 2024 but the government borrowed more than Tk1.20 trillion in that year.

The deposit growth is probably 11% by the end of December last, which means an additional Tk2.20 trillion is projected to be injected into the market. But the government is set to borrow over Tk1 trillion this year, according to the governor.

"So, the banks will have enough liquidity to be invested in the private sector. I think banks would start finding borrowers now," he said.

Mansur said they have given policy support to everyone who seeks such regulatory intervention to get rid of various anti-business hurdles.

He also informed that the central bank is eyeing the liberalisation of the foreign exchange market. "We want to see our corporate flags all over the world. That's why we keep building our forex reserve," he added.

Mansur said the country's balance of payments has strengthened following a rise in foreign exchange inflows, while the financial account has already shown significant improvement.

He noted that deposit growth reached around 11% in November, driven by the overall surplus in the balance of payments.

According to him, higher foreign exchange inflows into the economy have directly contributed to the increase in bank deposits.

Mansur noted that the country built its foreign exchange reserves without IMF dollar support and that its external position is currently in surplus.

Bangladesh's economy picked up pace in Q1 (Jul–Sep) of the current fiscal year FY26, with GDP growth at constant prices rising to 4.50%, up from 2.58% in the same period of the previous fiscal year. Agriculture sector also recovered, expanding 2.30% after a 0.60% contraction a year ago.

An Afghan delegation headed by the country’s deputy commerce minister met Bangladesh’s commerce secretary today, expressing hope for duty-free bilateral trade.

Deputy Minister of Commerce and Industry of Afghanistan, Mawlawi Ahmadullah Zahid, made the proposal during a meeting with Commerce Secretary Mahbubur Rahman at the latter’s office in Dhaka.

Zahid led the Afghan delegation of five to six members, said a senior commerce ministry official who asked not to be named.

It was not a formal bilateral meeting where documents or proposals were usually exchanged, the official added.

At the meeting, the Afghan deputy minister said his country seeks duty-free export of nearly 45 products to Bangladesh, including cotton, aiming to expand bilateral trade ties.

At the same time, he offered duty-free import of almost all major exportable commodities from Bangladesh.

Afghanistan considers Bangladesh a major source for RMG products, pharmaceuticals, beverages, confectionery, and packaged spices, Zahid added.

The commerce secretary could not be reached by phone for comments after the meeting.

A businessman involved in exports to Afghanistan said the two countries currently trade 98 products.

In terms of exporting dry food, fruits, stones, saffron, and almonds, Afghanistan may want to capture more of the market in Bangladesh, the businessman added.

Zahid arrived in Dhaka on Sunday as the head of the delegation, aiming to expand trade and economic ties.

A few months ago, another delegation from Afghanistan visited Bangladesh to discuss bilateral trade and investment with senior government officials.

Portfolio outflows are likely to pressure the Indian rupee and government bonds this week, leaving the currency vulnerable to fresh lows and debt markets under strain, with the focus on debt supply.

The rupee closed at 90.8650 per dollar on Friday (16 January), down 0.7% week-on-week and inching closer to its all-time low of 91.0750 hit in December.

The currency has remained under pressure since steep US tariffs on Indian goods went into effect last year and investors reckon a turnaround in fortunes is unlikely in the absence of a breakthrough in negotiations between New Delhi and Washington.

"The single most important issue remains a comprehensive and balanced trade deal with the United States, probably at least partly dependent on an easing of the personal tensions between Indian PM Modi and US President Donald Trump," said Carl Vermassen, a portfolio manager in the emerging markets debt team at Zurich-based Vontobel Asset Management.

The trade limbo has also dulled the sheen of local stocks for foreign investors who have pulled out about $2 billion from local stocks over January so far, contributing to pressure on the rupee.

The dollar index, meanwhile, logged its third consecutive weekly gain on Friday, bolstered by fading odds of imminent rate cuts by the US Federal Reserve. While the data calendar is relatively light this week, the focus will be on US personal spending and GDP data.

Meanwhile, rupee traders will be assessing the fallout of the Greenland dispute on the dollar, US yields and risk appetitive. US President Donald Trump vowed to slap tariffs on eight European nations until the US is allowed to buy Greenland.

Bonds

The 10-year benchmark 6.48% 2035 yield settled at 6.6767% on Friday, up for a third consecutive week on supply worries and missing the bus for a global index inclusion.

Traders expect the yield to move in a 6.63%–6.72% range, with continued attention on the overall demand-supply scenario as well as the central bank's liquidity action.

Last Tuesday, Bloomberg Index Services deferred the inclusion of local bonds to its flagship Global Aggregate Index, which left market participants dejected as they were counting on foreign inflows amid worries over excess supply and elevated yields.

Vermassen, who expects inflows of $20 billion from the Bloomberg index inclusion, said it would not be a game-changer, with the impact being somewhat smaller, in relative terms, than the earlier inclusion in JPMorgan index.

Heavy weekly borrowing from the centre and states continues, with aggregate gross supply of 8 trillion rupees this quarter. This has pressured yields, leading to the spread widening between federal and state government debt.

"We expect spread to increase further given higher state debt supply and lower demand from market participants. We do not see any significant impact on central government bond yields," said Srinivas Rao Ravuri, chief investment officer at Bajaj Life Insurance.

Local apparel exporters have opposed the commerce ministry’s recommendation to remove duty benefits on certain yarn imports under the bonded warehouse facility.

They argue that such restrictions would force them to spend more on locally produced yarn, which eventually will reduce the global competitiveness of the country’s ready-made garments at a time when export growth is slowing.

The commerce ministry recently recommended the National Board of Revenue (NBR) to scrap duty benefits on imported yarn of 10 to 30-count, a medium-to-coarse range widely used in knitwear production.

The move is meant for protecting local spinners, who claim they were sitting on Tk 12,000 crore of unsold stock as of December last year amid a surge of Indian yarn.

At a joint press conference at Pan Pacific Sonargaon Dhaka yesterday, leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said local spinners should expand capacity and modernise production rather than depending on an “artificial duty shield”.

BGMEA Director Faisal Samad said they are relying more on Indian yarns because of their competitive prices. “In this case, shorter lead-time is not a major factor,” he said.

Leaders at the press conference criticised the commerce ministry for not consulting with them before making the decision. They said that officials of the Bangladesh Trade and Tariff Commission (BTTC), which operates under the commerce ministry, held meetings with them.

BKMEA President Mohammad Hatem said that no decision on duty withdrawal was made during discussions with BTTC officials.

The garment-makers said they would be willing to purchase local yarn even if it cost 20 cents more per kilogramme. Currently, the price differences range from 30 to 40 cents per kilogramme.

Acting BGMEA President Selim Rahman said the price of widely used 30 count yarn ranges from $2.50 to $2.60 per kilogram internationally, compared with $3 per kilogram for locally produced yarn.

In fiscal 2022-23, imported yarn from India cost Tk 428.37 per kilogram, yet the same quantity sold locally at Tk 389.18 per kilogram. Rahman said spinning mills are running below capacity due to gas shortages, which limit their ability to meet demand.

He warned that withdrawing the bond facility would harm garment shipments. Apparel exports fell by 2.63 percent in July-December this fiscal year, with a 14.23 percent decline in December alone.

Rahman urged local millers to modernise production to diversify yarn types and meet buyer demand.

On Sunday, apparel exporters sent a letter to the finance ministry elaborating on their concerns and mentioning almost the same demands they made yesterday.

At the press conference, garment manufacturers also proposed a number of alternatives to support the domestic spinning sector.

They suggested a 5 percent cash incentive for using local yarn to protect the $25 billion invested in the primary textile sector from being undercut by cheaper Indian imports.

The exporters also urged the government to ensure adequate gas and power supply to industrial units, as most spinning mills are running at just 60 percent capacity due to utility shortages.

They called for corporate tax rebates for export-oriented yarn producers and low-interest loans to reduce production costs and improve competitiveness.

BKMEA Executive President Fazlee Shamim Ehsan called for urgent talks with the government to reach a workable solution.

Previously, on December 29, the Bangladesh Textile Mills Association (BTMA) asked the BTTC to either suspend the bonded warehouse benefit or impose a 20 percent tariff on widely used imported yarn.

A commerce ministry letter to the NBR said that Bangladesh will need a two-stage transformation of garment items for entering key markets such as Europe, Australia, the UK, the USA, and Japan after graduating from least-developed country status in November.

To maintain GSP Plus privileges in the post-LDC era, local value addition will need to reach 40 percent.

Another consignment of 57,203 tonnes of wheat from the United States has arrived at Chittagong Port.

The vessel MV Clipper Isadora, carrying the wheat from the US, arrived at the outer anchorage of the port today (19 January), reads a press release.

The shipment has been imported under a cash purchase agreement (G to G-02) signed in line with a memorandum of understanding (MoU) between the governments of the United States and Bangladesh.

Under the G to G-02 agreement, a total of 220,000 metric tonnes of wheat will be imported. The MV Clipper Isadora represents the second consignment under this agreement. Earlier, 56,890 metric tonnes of wheat arrived in the country as the first shipment.

Of the 57,203 metric tonnes carried by the vessel, 34,320 metric tonnes will be unloaded at Chattogram Port, while the remaining 22,443 metric tonnes will be discharged at Mongla Port.

Meanwhile, under the earlier G to G-01 agreement, Bangladesh has already imported a total of 220,000 metric tonnes of wheat.

Payra Port, conceived as Bangladesh's third seaport to reduce dependence on Chattogram and lower logistics costs, is edging towards functional irrelevance as stalled maintenance dredging has silted up its access channel, sharply reducing ship calls.

The consequences are now adding to port congestion, raising power generation costs at two coal-based plants, and exposing serious gaps in infrastructure planning.

Port data shows that in the first half of FY26, only 17 foreign mother vessels called at Payra, down from 111 in FY23 and 123 in FY24. Even in FY25, when traffic had begun to taper, the port handled 85 ships.

The decline is striking given that more than Tk6,500 crore was spent on capital dredging to make Payra accessible to large vessels. Barely a year after completion, big ships are again unable to enter the seaport.

The problem lies in the Rabnabad channel, where heavy siltation has reduced navigable depth.

Officials said the draft has fallen to around 6.5 metres, down from the designed 10.5 metres, effectively barring large vessels and negating the benefits of capital dredging.

Coal ships supplying the Payra Thermal Power Plant and Norinco International Power Limited (RNPL) now unload at Chattogram's outer anchorage. The coal is then brought to Payra via lighter vessels, a slow, costly, and increasingly unsustainable workaround.

Additional lightering strains an already stretched system and has raised electricity generation costs by as much as Tk0.70 per unit, feeding into higher energy prices for consumers.

Payra Port officials blame the crisis on the absence of approved maintenance dredging following the 2024 capital dredging. Over the past year, unchecked siltation has steadily reduced channel depth.

A Tk6,500 crore maintenance dredging project has remained stuck at the proposal stage for nearly a year, officials said, citing the interim government's reluctance to approve major new projects.

Mohammad Jamal Uddin Chowdhury, member (harbour and marine) of the Payra Port Authority, said continuous maintenance dredging was essential immediately after capital dredging.

"That approval didn't come," he told The Business Standard. "As a result, siltation reduced navigability, preventing mother vessels with 8-10.5 metres draught from entering. Coal ships for the power plants now have to unload at Chattogram and be brought here through lightering."

He added that the authority plans to undertake both capital and maintenance dredging and has initiated steps to procure two trailing suction hopper dredgers (TSHDs) to maintain channel depth year-round.

The proposal, however, is still awaiting approval, delayed partly by the election period and the interim government's reluctance to take major policy decisions, said Jamal Uddin.

However, Shipping Adviser Shakhawat Hossain told TBS that delays in submitting the maintenance dredging proposal had worsened the situation.

"A hopper dredger will be required for this work, and procuring one takes time," he said. "The Payra Port Authority is now preparing a fresh proposal, which will take additional time."

On the port's prospects, he said it was too early to say.

Coal ships diverted via Chattogram, costs climb

During FY24, while capital dredging was underway, Payra regularly handled vessels with drafts of around 10 metres, carrying 40,000 to 45,000 tonnes of coal. At times, 12 to 14 coal ships berthed each month.

Now, large carriers are anchored at Kutubdia or Chattogram's outer anchorage, unloading cargo via lighter vessels in batches of 5,000 to 6,000 tonnes to the jetties of Payra Thermal Power Plant and RNPL.

"Big ships can't berth here anymore," said Jobaer Ahmed, superintendent engineer of the Payra Plant. "The plant requires around 300,000 tonnes of coal monthly. Earlier, seven to eight mother vessels handled this directly at our jetty. Now over 200 lighterage vessels are needed."

He added that cranes designed for large ships struggle with smaller lighter vessels. "The process is slow and costly," he said, noting electricity production costs have risen by around Tk0.70 per unit.

Revenue pressure, levy proposed

Since commercial operations began in August 2016, Payra Port has handled 5,338 vessels, including 544 foreign ships, generating around Tk1,861.82 crore in government revenue up to 31 December 2025.

With foreign calls falling, revenue pressure is mounting. To fund dredging, the PPA has proposed an annual Tk700 crore levy on its two largest users – the 1,320MW Payra Thermal Power Plant and RNPL.

Together, the plants consume around 12,000 tonnes of coal daily, importing nearly 10 million tonnes annually, making uninterrupted maritime access critical.

"Our income has definitely declined," Jamal Uddin Chowdhury said. "Without a stable dredging mechanism, this situation will persist."

Big vision, unfinished port

Launched in 2013, Payra was initially conceived as a deep-sea port. The plan was later revised as a standard seaport, 65km inland at the mouth of the Rabnabad channel.

The Payra Port Authority was established under the 2013 Act. Feasibility studies were conducted by British consultancy HR Wallingford, and the masterplan prepared by Dutch firm Royal Haskoning in 2019.

Ships began calling at the outer anchorage that year. Since then, 5,338 domestic and foreign vessels have used the port, generating about Tk267 crore in revenue for the port until December 2025.

Payra remains under construction, with completion scheduled for December 2026. Work continues on terminal equipment, administrative and customs buildings, warehouses, and a six-lane road. Full operations, initially planned for July, are now likely to be delayed until January 2027 due to lack of dredging approval.

The growing threat of a renewed trade war between the United States and the European Union is stoking fears among Bangladeshi garment exporters that retaliatory tariffs could trigger global supply chain volatility and suppress consumer demand in their most vital markets.

Industry insiders say any escalation of tariff measures between the two economic blocs could trigger fresh inflation in the US and Europe, reducing consumer spending and, in turn, demand for Bangladeshi apparel. Such a scenario could further strain exports.

Data show that Bangladesh's overall exports, including readymade garments, have been declining for five consecutive months, while prices in the European market have also softened during the period.

Representatives of foreign buyers sourcing from Bangladesh, however, believe the immediate impact of any new tariff measures would be limited, although prolonged trade tensions could create uncertainty over the longer term.

According to a report by The Guardian, the EU's top diplomats met for crisis talks on Sunday (18 January) and discussed reviving a plan to levy tariffs on €93 billion ($108 billion) of US goods, which was suspended after last year's trade deal with Trump.

In a post on Saturday on Truth Social, US President Donald Trump said he would impose a 10% tariff on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland beginning 1 February.

Media reports also said Trump threatens a 25% tariff on European allies until Denmark sells Greenland to the US.

Experts warn that such tariff disputes could destabilise not only transatlantic trade but the wider global trading system.

MA Rahim Feroz, vice-chairman of DBL Group – one of Bangladesh's largest apparel exporters with annual turnover exceeding $1 billion – told TBS that higher tariffs in Europe or the US would inevitably lead to inflation.

"If inflation rises, consumers will buy less, which will put significant pressure on us and negatively affect Bangladesh's exports to those markets," he said.

Echoing Feroz, Md Shehab Udduza Chowdhury, vice president of the Bangladesh Garment Manufacturers and Exporters Association, warned that imports could be affected if trade tensions intensify.

In 2025, Bangladesh exported garments worth $38.82 billion globally, with nearly 80% destined for the European Union, the US and the UK.

Exporters say Bangladesh has already felt the impact of reciprocal tariffs imposed by the Trump administration, with shipments to both the US and Europe coming under strain. They add that garment prices in the European market have declined as a result.

Feroz noted that after the US imposed higher tariffs on China and India than on Bangladesh, the two larger exporters stepped up efforts to sell more in Europe, intensifying competition and forcing Bangladeshi exporters to offer price discounts.

An analysis of Eurostat data by the Bangladesh Apparel Exchange shows that the average price of Bangladeshi apparel exported to Europe fell by 2.06% between January and September 2025. Prices of apparel from other major exporting countries also declined during the same period.

Trade experts see little upside for Bangladesh if a trade war erupts between Europe and the US.

Mostafa Abid Khan, an international trade expert and former member of the Bangladesh Trade and Tariff Commission, said he does not foresee any major short-term disruption to Bangladesh's exports or imports.

Before the latest tariff announcements, US tariffs on EU goods ranged from zero to 15%, while UK exports to the US faced a 10% tariff. US goods entering the UK are subject to a 6% tariff, and EU data show that a significant number of US products have enjoyed duty-free access to the EU since August.

Buyers remain unconcerned

Despite exporters' worries, foreign buyers say their sourcing from Bangladesh remains unaffected.

A senior official at the Dhaka office of a Sweden-based brand, speaking on condition of anonymity, said potential EU-US tariffs are unlikely to hurt Bangladeshi exports.

"We source around $250 million worth of products from Bangladesh each year, and our order flow remains normal – if anything, it may increase in the future," he said.

Similarly, the country manager of a Germany-based sportswear brand said the tariffs under discussion are selective and unlikely to affect Bangladesh directly. "However, it is still too early to say what the long-term consequences might be if such a situation persists."

Bangladesh Bank Governor Ahsan H Mansur has expressed strong confidence in the country’s ability to meet or exceed its $35 billion foreign exchange reserve target for the current fiscal year—without depending on International Monetary Fund (IMF) disbursements.

He made the remarks while addressing a seminar titled “Understanding the Pulse of the Economy Through the Purchasing Managers Index (PMI)” jointly organised by the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh at the MCCI office in Dhaka this evening.

“This will be a very comfortable level of reserve—and that too, without the IMF money,” Mansur said. “If anything comes from the IMF, it will be icing on the cake, not a necessity.”

Mansur said the macroeconomic consolidation process is ongoing and significant improvements have been made on the balance of payments and reserve fronts.

Despite challenges in exports, he highlighted gains in terms of trade due to declining global energy prices. “Import volume has increased even though payment has risen only 5-6 percent. This reflects a 30 percent drop in petroleum prices, which has translated into strength on our external side,” he added.

Chattogram Port data also show a substantial rise in import volumes—both in tonnage and container traffic—indicating robust trade activity.

The governor emphasised that Bangladesh Bank is closely monitoring a range of high-frequency indicators, such as daily exchange rates, remittance flows, interest rates, and reserve levels.

He also acknowledged the importance of newly introduced tools such as the Purchasing Managers Index (PMI), calling it a “welcome addition” to the country’s economic monitoring arsenal.

Touching on domestic liquidity conditions, Mansur pointed out that deposit growth rose from 6.4 percent in December 2022 to 11 percent in December 2023, with total deposits reaching Tk 20 trillion.

“This translates to an additional Tk 2.2 trillion in liquidity. After accounting for government borrowing, over Tk 1.2 trillion is now available for private sector credit,” he said.

He expects deposit growth to rise further to 14 percent, backed by a surplus in the balance of payments and buildup of net foreign assets—further easing liquidity pressures in the banking sector.

Mansur signaled that the lending rate to prime borrowers has already dropped by nearly 2 percentage points, ranging between 11-12 percent.

He reiterated that sustained improvement in inflation, currently above 8 percent, is critical before policy rates can be relaxed further.

“As soon as inflation drops by over 1 percentage point, we will begin rolling back the policy rate,” he stated.

Highlighting past support to the private sector amid multiple shocks—including COVID-19, exchange rate volatility, and political transitions—the governor said 1,500 out of 3,300 applications for loan restructuring have already been processed.

He warned against “shortcuts” in monetary policy that could jeopardise hard-earned stability, particularly in the foreign exchange market.

“We must not abandon a working strategy due to impatience,” he said.

The governor also emphasised Bangladesh Bank’s ongoing efforts to liberalise the foreign exchange market, including facilitating the international expansion of Bangladeshi businesses.

India's central bank has proposed that BRICS countries link their official digital currencies to make cross-border trade and tourism payments easier, two sources said, which could reduce reliance on the US dollar as geopolitical tensions rise.

The Reserve Bank of India (RBI) has recommended to the government that a proposal connecting the central bank digital currencies (CBDCs) be included on the agenda for the 2026 BRICS summit, the sources said. They requested anonymity because they were not authorised to speak publicly.

India will host the summit, which will be held later this year. If the recommendation is accepted, a proposal to link the digital currencies of BRICS members would be put forward for the first time. The BRICS organisation includes Brazil, Russia, India, China and South Africa, among others.

The initiative could irritate the US, which has warned against any moves to bypass the dollar.

US President Donald Trump has previously said the BRICS alliance is "anti-American" and he threatened to impose tariffs on its members.

The RBI, India's central government and the central banks of Brazil and Russia did not respond to emails seeking comment. The People's Bank of China said it had no information to share on the subject in response to a Reuters request for comment; the South African central bank declined to comment.

The RBI's proposal to link BRICS' CBDCs for cross-border trade finance and tourism has not been previously reported.

Building bridges

The RBI's proposal builds on a 2025 declaration at a BRICS summit in Rio de Janeiro, which pushed for interoperability between members' payment systems to make cross-border transactions more efficient.

The RBI has publicly expressed interest in linking India's digital rupee with other nations' CBDCs to expedite cross-border transactions and bolster its currency's global usage. It has, however, said its efforts to promote the rupee's global use are not aimed at promoting de-dollarisation.

While none of the BRICS members have fully launched their digital currencies, all five main members have been running pilot projects.

India's digital currency — called the e-rupee — has attracted a total of 7 million retail users since its launch in 2022 December, while China has pledged to boost the international use of the digital yuan.

The RBI has encouraged the adoption of the e-rupee by enabling offline payments, providing programmability for government subsidy transfers and by allowing fintech firms to offer digital currency wallets.

For the BRICS digital currency linkages to be successful, elements like interoperable technology, governance rules and ways to settle imbalanced trade volumes would be among the discussion topics, one of the sources said.

The source cautioned that hesitation among members to adopt technological platforms from other countries could delay work on the proposal and concrete progress would require consensus on tech and regulation.

One idea that is being explored to manage potential trade imbalances is the use of bilateral foreign exchange swap arrangements between central banks, both the sources said.

Previous attempts by Russia and India to conduct more trade in their local currencies hit roadblocks. Russia accumulated large balances of the Indian rupee for which it found limited use, prompting India's central bank to permit the investment of such balances in local bonds.

Weekly or monthly settlements for transactions are being proposed to be made via the swaps, the second source said.

Long road

Founded in 2009 by Brazil, Russia, India and China, BRICS later expanded to include South Africa and has since broadened further, adding newer members like the United Arab Emirates, Iran and Indonesia.

The bloc has returned to the limelight thanks to Trump's revived trade-war rhetoric and tariff threats, including warnings aimed at countries aligning with BRICS. At the same time, India has edged closer to Russia and China as it faced trade friction with the US.

Past efforts to turn BRICS into a major economic counterweight have run into hurdles, including an ambition to create a common BRICS currency, an idea that was floated by Brazil but was subsequently nixed.

While interest in CBDCs has been dampened globally by rising stablecoin adoption, India continues to position its e-rupee as a safer, more regulated alternative.

CBDCs "do not pose many of the risks associated with stablecoins," RBI Deputy Governor T Rabi Sankar said last month.

"Beyond the facilitation of illicit payments and circumvention of control measures, stablecoins raise significant concerns for monetary stability, fiscal policy, banking intermediation and systemic resilience," Sankar said.

India fears widespread stablecoin use could fragment national payments and weaken its digital payments ecosystem, Reuters reported in September.

The stock market regulator has rejected bond issuance proposals worth Tk 2,100 crore from several banks that had earlier received no-objection certificates from the Bangladesh Bank (BB).

According to official documents from earlier this month, Southeast Bank, Al-Arafah Islami Bank, Meghna Bank, and One Bank are among the lenders whose bond proposals were rejected.

BB, the regulator of the banking sector, had earlier issued no-objection certificates after assessing the banks’ capital adequacy and leverage position, liquidity profile, asset quality, stress-test outcomes, repayment capacity, and governance standards.

However, the Bangladesh Securities and Exchange Commission (BSEC) said it rejected the proposals because the banks’ “financial performance, particularly liquidity and profitability, is not satisfactory”.

A no-objection certificate from the BB is a mandatory requirement for banks seeking to issue bonds, but it does not guarantee approval by the stock market regulator.

“After the merger of five banks, there is growing fear that bond subscribers could lose their invest-ments if a bank’s financial condition deteriorates,”
Saiful Islam, President of the DSE Brokers Association of Bangladesh
According to a senior merchant banker, the central bank’s NOC signals that a bond proposal complies with prudential regulations and does not pose systemic risk to the banking system.

“It means the proposal has passed the most critical checkpoint for banking stability,” he said, adding that BB focuses mainly on whether a bond could weaken a bank or create broader financial stress.

The BSEC, by contrast, assesses the proposal from the perspective of the capital market, with emphasis on investor protection, disclosure quality, cash flow, and the issuer’s ability to repay bondholders on time, said the banker, preferring anonymity.

He said subordinated bonds are an important tool for banks to strengthen tier-2 capital without diluting equity, improve maturity matching, and reduce reliance on short-term deposits.

“At a time when many banks are undergoing leadership changes, balance sheet clean-ups, and operational restructuring, bond financing can provide breathing space for a sustainable turnaround,” he said.

Capital market representatives, however, defended the BSEC’s cautious approach.

Saiful Islam, president of the DSE Brokers Association of Bangladesh (DBA), said the recent merger of five banks had heightened risks for bondholders, as merger schemes addressed depositor interests but offered no clear protection for bond investors.

“After the merger of five banks, there is growing fear that bond subscribers could lose their investments if a bank’s financial condition deteriorates,” he said.

Islam also criticised credit rating agencies, saying they had failed to reflect the true financial health of banks, leaving bond investors exposed.

“Usually, investors rely on credit ratings when subscribing to bonds. But the rating agencies did not properly capture the risks,” he said, adding that bond approvals should therefore be handled with greater scrutiny in the public interest.

He said that banks whose bond proposals were rejected might face short-term pressure, but they should consider raising capital through equity injection instead.

BSEC Spokesperson Abul Kalam said obtaining a no-objection certificate from the BB is only one of several conditions for bond approval.

“It does not mean that if the central bank gives an NOC, the BSEC must approve the bond,” he told The Daily Star.

He said the commission approves debt securities in line with its own rules and regulations, and may reject proposals if a bank’s financial performance and cash flow are weak.

“If cash flow is not satisfactory, the bank may face difficulties in repaying bondholders. That risk has to be assessed independently,” he added.

Bangladesh Bank Spokesperson Arif Hossain Khan said each regulator has a different perspective and operates within its own mandate. “The decision not to approve some bonds is entirely the BSEC’s consideration, and it has the authority to do so,” he said.

Contacted, Khwaja Shahriar, chairman of Al-Arafah Islami Bank, whose bond issuance proposal was rejected by the stock market regulator, said the bank had been on a steady recovery path since the board was reconstituted.

He said liquidity conditions have improved, and the bank’s overall financial position is strengthening gradually.

“We seek the continued support of the BSEC and firmly believe they will assist us in further strengthening the institution’s strength for the sake of national development,” he added.

Bangladesh Securities and Exchange Commission (BSEC) Chairman Khondoker Rashed Maqsood on Sunday said recent regulatory reforms have significantly eased the entry of new companies into the capital market, particularly through initial public offerings (IPOs), marking a major step forward in market development.

He made the remarks while speaking at the fifth monthly coordination meeting with capital market stakeholders held at BSEC in Agargaon.

The chairman outlined the commission's key reform initiatives aimed at strengthening market structure and restoring investor confidence.

He said the commission completed three major regulatory reforms in 2025 the margin rules, mutual fund rules and the public offer of equity securities rules, which together constitute a substantial part of the long-awaited legal overhaul of the capital market.

Describing IPOs as the "heart of the capital market," Rashed Maqsood said the new IPO rules have removed long-standing bottlenecks and created a more efficient and transparent pathway for new listings.

The meeting was attended by Anisuzzaman Chowdhury, special assistant to the chief adviser and chairman of the committee formed to strengthen the capital market, along with BSEC commissioners and other senior market officials.

Anisuzzaman said addressing identified structural barriers must be a collective effort, stressing the need for coordinated action to resolve long-standing challenges.

He welcomed the stakeholder consultation mechanism, noting that such forums are essential for identifying problems and crafting practical solutions.

Anisuzzaman also called for swift resolution of immediate obstacles and urged stakeholders to work towards long-term goals under a clearly defined development roadmap.

The meeting discussed a wide range of reform and development initiatives, including a five-year capital market development plan, introduction of new financial products, roadshows, e-KYC-based investor onboarding and online BO account opening, establishment of a commodity exchange, increased API connectivity among market institutions, listing of state-owned and multinational companies, mergers and acquisitions, development of the mutual fund sector, institutional governance reforms, registration and operationalisation of CCBL, expansion of merchant banking activities, and nationwide investment education programmes.

Among others present were Dhaka Stock Exchange (DSE) Chairman Mominul Islam, CCBL Chairman Major General (retd) Wahid-uz-Zaman, DSE Brokers Association (DBA) President Saiful Islam, Investment Corporation of Bangladesh (ICB) Managing Director Niranjan Chandra Debnath, DSE Managing Director Nuzhat Anwar, Central Depository Bangladesh Limited (CDBL) Managing Director Abdul Motaleb Chowdhury, Bangladesh Merchant Bankers Association (BMBA) President Iftekhar Alam, and DSE Director Minhaj Mannan Emon.

Tawfika Foods and Lovello Ice Cream, a listed company on the stock exchanges, reported that its net profit grew to Tk20.93 crore in the first half of the current fiscal year, marking a 62% year-on-year growth.

The company's net profit in the October-December quarter surged 119% to Tk11.41 crore.

Following the quarterly earnings despite growth in its profitability, its shares price fell by 1.54% to Tk70.10 each at the Dhaka Stock Exchange (DSE).

Its diluted earnings per share (EPS) in the first half stood at Tk2.13, and in the Q2 at Tk1.16, which was Tk1.38, and Tk0.56 respectively in the same time of the previous fiscal year.

Regarding the significant variation in EPS, Lovello said its net profit increased 62% compared as the sales increased 29%.

The diluted net operating cash flow per share significantly jumped to Tk4.48, up from Tk1.78 in the same time of the previous fiscal year meaning that its cash inflow increased significantly.

While its net asset value increased by around Tk10 crore to Tk122.91 crore at the end of December, which was Tk112.27 crore at the end of June 2025, its quarterly report showed.

Lovello has paid a 16% dividend combining of 11% cash dividend and a 5% stock dividend for the fiscal year ending 30 June 2025 as part of its continued efforts to reward shareholders despite a modest drop in annual earnings.

At the end of FY25, the company reported earnings per share (EPS) of Tk1.65, in comparison, the restated EPS for FY24 were Tk1.79.

In the same meeting, the board proposed to increase the company's authorised capital from Tk100 crore to Tk200 crore, subject to approval from shareholders and regulators at the upcoming AGM.

In a recent disclosure, Taufika Engineering placement holders declared to have sold 5 lakh shares to Taufika Foods.

Md Ekramul Haque, a sponsor-director of Taufika Foods expressed his intention to transfer 25 lakh shares of the company to his brother Md Zahedul Haque, a general shareholder of the company by way of gift outside the trading system of the stock exchanges within 30 working days.

The Bangladesh Securities and Exchange Commission (BSEC) has imposed fines on two credit rating companies – ARGUS Credit Rating Services Ltd and National Credit Ratings Limited – for violating regulatory provisions governing the credit rating process.

According to sources at the securities regulator, the commission fined Tk5 lakh each on the two firms. The penalties were disclosed in the BSEC's monthly enforcement report for December.

In the case of ARGUS Credit Rating Services Ltd, the action followed a complaint lodged by National Credit Ratings Limited.

National Credit Ratings informed the regulator that it had entered into a credit rating agreement with Padakhep Manabik Unnayan Kendra (PMUK) on 11 April 2019. Under the Credit Rating Companies Rules, 1996, and the terms of the agreement, National Credit Ratings was responsible for conducting surveillance ratings for at least three years following the initial rating.

However, the complaint stated that PMUK, without obtaining prior approval from the BSEC, subsequently entered into a separate agreement with ARGUS Credit Rating Services and obtained a credit rating from the firm.

A BSEC enquiry found the allegation to be valid and concluded that ARGUS had breached the applicable rules. As a result, the commission decided to impose a fine of Tk5 lakh on ARGUS Credit Rating Services Ltd.

Separately, the regulator also took enforcement action against National Credit Ratings Limited following a complaint from Credit Rating Information and Services Limited (CRISL).

According to the complaint, CRISL had signed an agreement with Rupali Insurance Company to conduct a credit rating. Despite the existing agreement, the insurer reportedly obtained a rating on the same issue from National Credit Ratings.

The BSEC investigation found that National Credit Ratings had violated the credit rating rules by issuing a rating and therefore imposed a fine of Tk5 lakh on National Credit Ratings Limited.

Fortune Shoes Limited slipped into losses in the first quarter of FY26, reflecting mounting cost pressures and ongoing governance concerns, according to its latest financial disclosure filed with the Dhaka Stock Exchange (DSE) on Sunday.

The footwear maker reported a loss per share of Tk0.31 for the July–September 2025 quarter, reversing from a profit of Tk0.11 per share in the same period a year earlier.

Following the disclosure, the company's share price fell 1.47% to close at Tk13.40 on the DSE.

The latest quarterly loss follows a difficult FY25, during which the company's profitability weakened amid rising manufacturing expenses and higher finance costs driven by elevated interest rates.

Earlier disclosures showed that earnings for the year ended 30 June 2025 declined as material costs surged, customer claims increased, and losses were incurred on several export orders. Reduced contributions from other income sources also weighed on overall profitability.

Despite the earnings pressure, Fortune Shoes recommended a 0.50% cash dividend for FY25, applicable only to general shareholders, excluding sponsors and directors.

Meanwhile, the company's auditors have raised serious concerns over financial management and regulatory compliance. G Kibria & Co, Chartered Accountants, reported major documentation gaps involving approximately Tk76 crore withdrawn in cash during the 2024–25 financial year.

According to the audit report, the funds were withdrawn from a regular account with Islami Bank through 207 cheques, but the company failed to provide essential supporting records, including cash and bank books, cheque counterfoils, vouchers, invoices, or delivery challans.

The auditors also highlighted irregularities in dividend distribution, noting that although dividends for the 2022, 2023 and 2024 financial years were approved, the full amounts were not transferred to designated dividend accounts. As of 30 June 2025, unpaid dividends stood at Tk10.05 crore a violation of applicable laws and regulations.

In a significant policy shift aimed at safeguarding the domestic spinning industry, the government is moving to scrap a decades-old duty-free import facility for yarn, a move that could see import taxes on the raw material surge to approximately 37%.

The commerce ministry formally requested the National Board of Revenue (NBR) on 12 January to suspend tariff-free imports under the bonded warehouse facility – an incentive in place since the 1980s – indefinitely. While the NBR is yet to implement the directive as of 18 January, the proposal has already created a sharp divide between local textile millers and export-oriented garment manufacturers.

A lifeline for local spinners

Local textile mill owners, who have invested an estimated $23 billion in the sector, argue that the move is essential for survival. According to the Bangladesh Textile Mills Association (BTMA), nearly 100 mills have already partially or fully closed due to a lack of demand.

"This decision provides a chance for our industry to survive," said Saleudh Zaman Khan Jitu, managing director of NZ Apparels Limited. He noted that Indian exporters have been selling yarn in Bangladesh at $0.30 per kilogram cheaper than their own domestic rates, thanks to various Indian government subsidies.

Fazlul Hoque, managing director of Israq Spinning Mills Limited, highlighted the severity of the crisis: "We currently have a stockpile of 3,000 tonnes of yarn, whereas our normal inventory is around 700 tonnes. Restricting imports will finally allow us to clear this stock."

Bangladesh earns about 85% of its export revenue from the readymade garment sector, with knitwear accounting for roughly 54% of total garment exports. Knitwear production relies heavily on 10-30 count yarn – the very category for which import restrictions have been sought.

According to Export Promotion Bureau data, Bangladesh imported yarn worth Tk26,700 crore (around $2.22 billion) in the 2024-25 fiscal year. Industry insiders say nearly 90% of imported yarn comes from India, where exporters allegedly benefit from government subsidies that allow them to sell yarn in Bangladesh at prices about $0.30 per kg lower than in their own domestic market.

The BTMA says the surge in duty-free imports has severely hurt local producers. Speaking at a recent press conference, BTMA President Showkat Aziz Russell said nearly 100 textile mills had already shut down partially or fully due to declining orders.

In its letter to the NBR, the commerce ministry argued that bonded imports of yarn had increased sharply over the past two years, drastically reducing sales of locally produced yarn and causing heavy financial losses. The letter warned that if the trend continues, more spinning mills will face closure, increasing import dependence, lengthening lead times, reducing local value addition and putting pressure on foreign exchange reserves.

RMG leaders raise concerns

However, the apparel sector – the backbone of Bangladesh's exports – has reacted with alarm. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) warn that the move could be "suicidal."

Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), alleged that some local yarn producers had already begun exerting pressure by delaying proforma invoices.

Industry leaders estimate that if duty-free imports are halted, the price of yarn could rise by approximately 10%, jumping from the current $2.55-$2.60 per kilogram to as much as $2.85.

"Our export competitiveness is at stake," said Md Shehabudduza Chowdhury, vice president of BGMEA. "Global demand for clothing has dropped by 15%, and exports have been declining for five months. We cannot pass these increased production costs on to international buyers."

The BGMEA and the BKMEA yesterday called a press conference for today to highlight their position.

Yarn price may rise by 10%

Currently, locally produced yarn sells for $2.70–2.75 per kg, compared with $2.55–2.60 for imported Indian yarn. Industry estimates suggest prices could rise by about 10% to $2.80–2.85 per kg if import restrictions are enforced.

After several months of relative stability, the prices of daily essentials are again edging upwards, with traders pointing to delays in cargo clearance at Chattogram port and consumer groups blaming a lack of effective market oversight.

Wholesale prices of key Ramadan items such as edible oil, sugar, chickpeas and lentils have increased by Tk3 to Tk5 per kilogram in just a week, raising concerns that retail prices could soon rise.

Market trends in Khatunganj

The impact is already visible in Chattogram's largest wholesale hub, Khatunganj. Over the past week, wholesale prices of almost all essential goods have risen. Locally produced onions are now selling at Tk35-40 per kg, up from Tk34-38 a week earlier, while Indian onions have increased by Tk3 to Tk60-65. Garlic prices have climbed by Tk3 to Tk130 per kg, and ginger, which sold at Tk100-105 two weeks ago, is now priced at Tk110-115. Chickpeas have risen by Tk5 to Tk70-75, depending on quality, while anchor lentils are selling at Tk45-48 per kg after a Tk2 increase.

At the wholesale level, sugar prices have jumped by Tk100 per maund (40kg) to Tk3,500, while palm oil is trading at Tk5,990 per maund. Prices of vermicelli, a Ramadan staple, have also increased to Tk1,950-2,000 per maund from Tk1,800-1,900 earlier.

Lighterage vessel shortage

Behind the price pressures lies a more serious logistical bottleneck at Chattogram Port. The main congestion points are the outer anchorage and the Kutubdia channel, where more than 100 cargo vessels remain stranded.

According to port data, as of 17 January, these ships were carrying over 4.5 million tonnes of goods, including around 1.2 million tonnes of Ramadan-related food items such as wheat, maize, soybeans, chickpeas, lentils and edible oil. More than 2,00,000 tonnes of sugar are also stuck on five vessels, while fertiliser and cement clinker shipments are similarly delayed.

Under normal conditions, a 50,000-tonne mother vessel can discharge cargo within seven to ten days using lighterage vessels to transport goods to river ports and terminals. Currently, however, acute shortages of lighterage vessels have stretched waiting times to 20-30 days.

The WTCC said demand for lighterage vessels far exceeded supply. On 13 January alone, 104 lighterage vessels were required to service 90 mother ships, but only about 50 could be allocated.

Calls for intervention

Expressing strong dissatisfaction with the current situation, SM Nazer Hossain, divisional president of the Consumers Association of Bangladesh (CAB) in Chattogram, told TBS that the lack of effective monitoring is allowing unscrupulous traders to exploit the market.

He noted that consumer groups had been urging authorities for stricter oversight for the past two to three months, but enforcement remained weak as officials were preoccupied with election-related and protocol duties.

"Ramadan is a month of worship for people, but for dishonest traders it becomes a season of profiteering," Nazer said, warning that artificial shortages could be created if monitoring is not strengthened immediately.

The CAB leader cautioned that the situation could mirror the liquefied petroleum gas market, where supply shortages are cited despite availability at higher prices. He stressed that waiting until Ramadan to intensify enforcement would be too late, as markets typically spiral out of control by then.

However, traders offered a different perspective. Md Mohiuddin, general secretary of the Chaktai-Khatunganj Aratdar General Traders Welfare Association, said supplies are adequate and trading is normal. He argued that prices remain lower than last year and have only risen slightly after an earlier period of unusually low rates.

The Directorate of National Consumer Rights Protection in Chattogram dismissed the justification for price hikes. Assistant Director Md Anisur Rahman said stocks currently exceed demand and import costs are lower than before. "There is no logical reason for prices to rise at this moment," he said, adding that action will be taken against any trader found increasing prices unreasonably.

Anisur also claimed that regular market monitoring is under way and will be intensified in the coming days.

Bangladesh's garment and other accessories industry is emerging as a formidable export powerhouse, with direct exports doubling over the last three years and stakeholders projecting a rise to $5 billion within the next three years if policy barriers are removed.

According to the Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA), the sector contributed $7.45 billion to national exports in the 2024-25 fiscal year. While the majority of this consists of "deemed exports" (supplies to the local RMG sector), direct exports reached $1.6 billion.

From import reliance to global ambition

Two decades ago, the Bangladeshi garment industry was almost entirely dependent on imported accessories. Today, through investments totalling approximately Tk40,000 crore, the sector has achieved nearly 100% supply capacity for the local export-oriented industries, employing over 7,00,000 people across 2,000 functional units.

"With the removal of a few policy hurdles, we can achieve $5 billion in direct exports not only for garments but also for pharmaceuticals, agriculture, footwear and other industries within three years," Md Shahriar, president of BGAPMEA, told TBS.

The global fashion accessories market, valued at $720 billion in 2023, is expected to hit $1,502 billion by 2033. Industry insiders believe Bangladesh is perfectly positioned to capture this growth as manufacturing hubs shift away from China.

As China moves toward high-tech manufacturing and away from basic items, foreign investors are flocking to Bangladesh. In the last two years alone, at least eight Chinese firms, including Baida Industrial, YiXin Bangladesh, and Tianhui Button, have proposed or initiated investments in Export Processing Zones (EPZs).

Over the past three years, nearly 300 new accessories companies have entered the Bangladeshi market, BGAPMEA estimates.

Local firms are also expanding rapidly. RSS Thread and Accessories Limited has doubled its production in three years, now manufacturing 35 types of accessories. The firm has been nominated by the Spanish retail giant Inditex Group to supply its 200+ Bangladeshi garment manufacturers.

Technological evolution

The sector is undergoing a digital transformation to meet international compliance standards. Over 100 factories are now prepared to invest in Radio Frequency Identification (RFID) technology for automated tracking and inventory management.

Innovative products such as "Digital Product Passports" (DPP) are already being manufactured locally. RSS Thread and Accessories produces specialised chips for labels that store comprehensive supply-chain data, a requirement for new European Union initiatives.

"Through these chips, buyers can verify where a product was made and what materials were used," said Sheikh Zulfikar Ali, group director of RSS Thread. "We have also introduced data-metrics systems and invisible coding to prevent counterfeiting, ensuring brand authenticity."

Policy challenges

Despite its progress, entrepreneurs say the sector faces significant policy challenges, including discriminatory export incentives and high import taxes on raw materials. Md Shahriar said the accessories sector has never received cash incentives, unlike other export industries.

He also pointed out that importing paper below 300 GSM attracts import taxes ranging from 58% to 83%, making it difficult to produce competitively priced products. In addition, exporters face various customs-related hurdles.

Former BGAPMEA president Rafez Alam Chowdhury said the sector continues to suffer from policy discrimination, warning that without targeted support, Bangladesh may fail to fully capitalise on the growing global demand for packaging and accessories products.

Abdul Kader Khan, managing director of Khan Accessories and a former BGAPMEA president, noted that political uncertainty over the past year has dampened investment inflows. He expressed optimism that investment would accelerate once stability returns following the formation of a new government.

New-generation Meghna Bank aims to rank among the country's top 15 lenders by expanding its footprint in the SME sector, Managing Director Syed Mizanur Rahman has said.

In a recent interview with The Business Standard's ASM Saad, he added that the bank plans to invest heavily in digital banking to reach customers in remote areas.

At a time when the banking sector is facing a severe crisis with default loans at 36%, Meghna Bank has kept its non-performing loans in single digits, which he believes will help build depositor confidence.

What kind of banking does Meghna Bank focus on?

Meghna Bank is focusing on small lending, particularly in the SME segment. The aim is to channel funds to areas where there is strong demand for small loans, so that small businesses can access financing more easily. There is currently significant demand for this type of small-scale financing, and the bank is working to understand the specific credit needs at the grassroots level.

Meghna Bank believes this approach will play a leading role in bringing positive change to the rural economy. At present, around 80% of the bank's portfolio is in corporate banking, but it is gradually expanding its exposure to retail, SME and digital banking in line with market demand.

Why is Meghna Bank focusing on retail banking?

Most banks in the country are heavily focused on corporate lending. There is a belief that larger loans generate higher profits. However, large lending also creates significant concentration risk. Non-performing loans have risen sharply, making corporate banking particularly vulnerable. By concentrating too heavily on corporate lending, many banks have significantly increased their risk exposure. If banks had maintained a more balanced focus on SME, retail and corporate banking from the outset, the sector's current challenges might have been less severe.

For this reason, Meghna Bank believes diversification is essential for long-term sustainability. Rather than being confined to a single segment, banks need a more diversified business model. Taking customer demand into account, Meghna Bank is therefore placing greater emphasis on retail banking and aims to deepen diversification in this segment after carefully assessing risk and business dynamics.

Why can depositors have confidence in Meghna Bank?

The country's top banks have a long history. Many first-generation banks are over 40 years old. Meghna Bank, by contrast, is about to celebrate 13 years of operations this year. When large and established companies choose a bank for deposits, they consider its overall financial health, as deposits are the lifeblood of a bank.

Meghna Bank's financial position is strong, with non-performing loans below 6%, giving it a solid foundation. As a result, several corporate clients are placing deposits with Meghna after assessing its financial strength. We expect individual customers will also be encouraged by the bank's robust position, as key indicators such as the ADR ratio, capital adequacy, and non-performing loans compare favourably within the sector.

What are the future plans for digital banking?

Since the future of banking is increasingly digital-focused, Meghna Bank is ramping up investments in this area. The plan is to integrate four platforms – web-based banking, corporate banking, retail banking, and mobile financial services (Meghna Pay) – into a single seamless system. This will allow customers to conduct transactions digitally without visiting a branch.

Once fully developed, digital banking will even enable customers to access loans remotely, a facility already available in many countries. We believe that Meghna can enter the list of the country's top 15 banks in the future, not merely in terms of profit but from a balance sheet strength perspective.

What challenges are fourth-generation banks facing?

Banks should not rely on political considerations; they must focus on their operations. Meghna Bank is actively building relationships with foreign correspondents and working to secure specific credit lines, which can be accessed once targets are achieved.

Political instability, however, can reduce the availability of credit lines. A fair and credible election is therefore essential, as it would show internationally that the country's situation is improving. After such an election, the overall environment is expected to stabilise, resolving issues related to credit line access.

Why is private sector investment low?

Currently, banks are struggling to find reliable, creditworthy borrowers. Political uncertainty has made entrepreneurs reluctant to invest in new businesses. As a result, private-sector lending demand is weak. This lack of new investment has contributed to rising unemployment. It is expected that after a credible election, private investment will pick up, which in turn will increase demand for loans.

At present, a significant portion of many banks' profits comes from treasury bills and bonds, reflecting the low appetite for private sector lending. Once investment activity resumes after the elections, demand for credit is likely to rise, enabling banks to expand lending again.

What impact does rescheduling loans have on the market in terms of reducing non-performing loans?

Many of the country's large borrowers have taken loans from banks but failed to repay them, with some diverting funds abroad instead of using them for the intended business purpose. For such companies, granting a two-year grace period or a ten-year rescheduling makes little difference.

However, there are businesses that genuinely face losses due to currency fluctuations and other economic factors. These enterprises truly need support, and targeted rescheduling can help them recover.