Oil prices slid to fresh three-month lows on Tuesday as markets weighed prospects for a resumption of supplies through the Strait of Hormuz alongside weaker physical demand and scant details on a preliminary deal to end the Iran war.

Brent crude futures were down $1.44, or 1.7 percent, at $81.73 a barrel, the lowest since March 10, at 0906 GMT.

US West Texas Intermediate was down $1.55, or 1.9 percent, at $79.20 a barrel, also the lowest since March 10. Oil prices had already dropped nearly 5 percent on Monday to their lowest close since March 4 after US President Donald Trump said a memorandum of understanding had been signed to end the US-Israeli war with Iran, though full details have not been released. Iranian Foreign Minister Abbas Araghchi said on Tuesday Iran and the US would start a new round of talks in Switzerland on Friday to reach a final agreement after the start of an interim deal. He warned that any Israeli attack on Lebanon or continued presence on Lebanese territory would breach the interim agreement.

INVESTORS EYE STRAIT REOPENING

The conflict led to the closure of the Strait of Hormuz, which typically carries about one-fifth of global oil supplies. Some analysts expect flows through the strait to resume soon, adding to downward pressure from already soft physical markets. Goldman Sachs lowered its fourth-quarter Brent forecast to $80 a barrel from $90 and cut its 2027 average estimate to $75 from $80, saying it now assumes Gulf exports return to pre-war levels by the end of July rather than late August. A range of indicators has pointed to weakening physical oil markets in recent weeks, Morgan Stanley analysts said in a client note. China’s crude imports slumped 29 percent in May to their lowest in eight years, extending a sharp decline for the world’s largest importer, with shipments of Saudi crude also expected to fall in July. Early indications suggest the US-Iran deal would reopen the blockaded Strait of Hormuz and extend a ceasefire for 60 days, buying time for negotiations on issues including Iran’s nuclear programme.

But with details still unclear and a permanent truce yet to be secured, analysts say volatility risks remain. Suvro Sarkar, the head of DBS Bank’s energy research, said the deal’s first phase - encompassing the Geneva signing of the ceasefire extension - was easy. The second phase - the reopening of the Strait of Hormuz and winding down the US naval blockade on Iranian ports and vessels - would be watched closely by markets, he added. “Anything other than a clean simultaneous unlock will mean renewed volatility in oil prices,” Sarkar said. “Given the trust deficit so far, it will be interesting to see how this plays out over the next couple of weeks.”

The Bank of Japan lifted its key policy rate to a 31-year high of 1.0 percent on Tuesday, warning of the risk of heightening inflation risks stemming from elevated crude oil prices due to the Middle East conflict and the weak yen.

The central bank, in the absence of Governor Kazuo Ueda who has been hospitalized for medical treatment, raised the short-term interest rate from 0.75 percent in its first hike since December, saying that the recent U.S.-Iran agreement to end the war is a positive development but still leaves uncertainties over the economy. The bank’s rate hike after keeping it steady at the three previous meetings brings its policy back on a normalization track after a decade of unorthodox easing that ended in March 2024.

The BOJ said in its statement that there is a risk of underlying inflation rising above its target of 2 percent as rises in crude oil prices lead companies to hike prices in business-to-business transactions “at a relatively fast pace,” which could “spread to an increase in consumer prices across a wide range of items.”

BOJ Deputy Governor Shinichi Uchida told a post-meeting press conference that the bank will continue to raise the rate to stabilize inflation at around the 2 percent target, judging that even after the latest hike financial conditions remain accommodative.

Uchida said that one of the major reasons behind the rate hike decision is reduced risks to the economy due to factors such as government measures to secure alternative sources of raw materials including imports of oil from regions other than the Middle East.

Uchida also said that the bank is watching currency moves carefully. On Tuesday afternoon in Tokyo, the U.S. dollar was trading above the 160 yen line, the level where the Japanese financial authorities intervened in the currency market just over a month ago to support the yen.

“We do not target specific exchange rates in guiding our monetary policy, but we engage in policy discussions on the view that currency moves have a crucial impact on economic and price developments,” he said.

Among the remaining eight policymakers excluding Ueda who discussed the policy change, the rate hike decision was opposed by Toichiro Asada, who joined the Policy Board in April and is viewed by the market as a proponent of reflationary policies and in favor of aggressive monetary easing.

In another policy change, the bank said it will pause the plan to reduce Japanese government bond purchases from the next fiscal year starting in April, at a time when long-term interest rates have been rising rapidly.

It will keep the current pace of reducing monthly purchases by about 200 billion yen every quarter for rest of this fiscal year, which would result in buying of around 2.1 trillion yen ($13 billion) per month in the last quarter of fiscal 2026.

But from April 2027 onwards, the bank will no longer reduce but steadily buy about 2 trillion yen a month under the new plan, citing the need to stabilize the bond market.

The BOJ decided in July 2024 to cut back its monthly government bond purchases as part of its efforts to normalize its monetary policy.

While raising the key policy rate could cool the economy by increasing borrowing costs for companies, restraining investment and dampening private spending, the central bank saw the need to respond to inflation risks following the launch of U.S.-Israeli attacks on Iran in late February and subsequent surges in crude oil prices.

The yen repeatedly falling to the 160 zone against the dollar, despite the Japanese authorities intervening in the currency market from late April to early May to curb the unit’s fall, has also stoked concerns about rising import costs for resource-poor Japan.

Even if the U.S.-Iran conflict ends following the two countries’ agreement to end the monthslong war, shipping through the Strait of Hormuz may not immediately stabilize, keeping transport, raw material and other costs elevated, analysts said.

But the agreement will relieve fears of disruptions in Japan’s supply chains, serving to reinforce the view that the economy is resilient enough to withstand further rate hikes, they said.

The decision to raise the rate puts the BOJ in line with other central banks shifting toward tightening of monetary policy amid inflationary pressures, such as the European Central Bank, which hiked its rate last week.

The two-day policy meeting was chaired by BOJ Deputy Governor Ryozo Himino, after Ueda was hospitalized to treat a hepatic cyst infection. Ueda’s hospitalization is “short and there will be no significant impact” on the BOJ’s steering of monetary policy, Uchida said.

Inflation risks have been flagged after Japan’s wholesale prices rose 6.3 percent in May compared to a year earlier -- the biggest increase in over three years. Firms are increasingly passing on rising costs from the war in Iran to the prices of their goods and services.

The data suggested that core consumer inflation may also accelerate, although it has been kept below the bank’s 2 percent target because of government subsidies for electricity, gas and gasoline, the analysts said.

Never bet against Donald Trump? The oil market appears to have made a risky wager from day one of the Iran war: The US president would not allow the conflict to spiral into a full-blown economic crisis. So traders wouldn’t price one in, no matter what was happening with physical supplies. It was a risky call, but it proved correct.

Oil prices certainly swung during the three-and-a-half-month war, as Iran’s key weapon was the unprecedented closure of the Strait of Hormuz. Tehran was able to choke off a fifth of the world’s oil and liquefied natural gas supplies overnight, gaining significant leverage.

Benchmark Brent crude surged from around $70 a barrel before the war to a peak of $118 in late March, before sliding back to $83 after Washington and Tehran announced a preliminary deal on Sunday. Given that the supply disruption was one of the largest in modern history, these moves were remarkably restrained. Consider that oil prices surged to $123 a barrel in the aftermath of Russia’s full-scale invasion of Ukraine in February 2022. This reflected market fears about the partial disruption of Moscow’s oil exports, which had totalled around 7.5 million barrels per day (bpd) the previous year. That is around half the effective volume lost during the Hormuz blockade. For decades, a Hormuz shutdown has been treated as the ultimate doomsday scenario for oil markets. Yet when it finally happened, prices jumped, but they didn’t spiral.

BEND, DON’T BREAK

On the surface, the explanation is straightforward: the physical market did its job. The global energy system displayed extraordinary flexibility and resilience. Governments and companies released hundreds of millions of barrels from commercial and strategic stockpiles. Luckily for them, production had been running hot heading into the conflict, with inventories rising quickly, which helped cushion the blow.

Demand also adjusted. Once the war broke out, Chinese imports weakened sharply, and across much of Asia, governments imposed consumption curbs to dampen energy use. That helped prevent a deeper economic shock. The system bent, but it didn’t break. But that is only half the story, and arguably not the most important half.

TRUMP PUT

Look more closely, and the market’s response to the drawdown in global inventories tells a different tale. Stocks were depleted at an unprecedented pace during the war, falling at an average rate of 5.3 million bpd between March and May, according to the US Energy Information Administration. They were nearing dangerously low levels just as the northern hemisphere was entering peak summer demand. That should have been a flashing red warning sign. Instead, it appeared to reinforce confidence that a deal was near.

What explains this? The implicit bet was clear: Trump would not let the situation deteriorate to a point where US gasoline prices would surge to unmanageable levels and risk reigniting broader inflation, especially with midterm elections looming. Put simply, investors believed he would blink before the market cracked.

So the lower inventories fell, the closer a deal seemed. This pattern should be familiar. During Trump’s second term, markets have repeatedly learned to discount the most extreme outcomes implied by his rhetoric and initial policy moves, whether sky-high tariffs announced on “Liberation Day,” attacks on Federal Reserve independence, or threats to take over Greenland. His most aggressive moves have invariably been followed by retreats once financial markets began to wobble. The so-called “Trump put” is no longer just about equities, however. During the Iran war, it shaped commodity markets as well. Markets weren’t ignoring the risks. They were pricing in Trump’s limits.

YOU CAN ONLY GO SO FAR

But the oil market’s “Trump trade” has boundaries. Unlike equities, which can be buoyed by sentiment for extended periods, commodity markets are ultimately anchored in physical reality. And reality was catching up with the president – and energy traders. Despite the market’s remarkably effective response to the Hormuz shock, the loss of around 1.4 billion barrels of supply since the start of the war still punched a vast hole in global inventories. That gap has not disappeared. Yet the deal announcement has dramatically reduced the risk of a massive spike in oil prices – a warning that was sounded only two weeks ago. The challenge now is that supply and demand are unlikely to recover in step, pointing to a period of volatility.

On the one hand, demand could spike. Refiners, traders and governments that drained inventories during the crisis will have to refill them. That will create a new wave of demand that could tighten markets as summer demand peaks and supply buffers remain thin. The strain is already visible in the United States. After pushing exports to record levels during the crisis, US crude inventories have fallen to their lowest since 2004, while gasoline stocks are at their lowest since 2014.

On the other hand, supply could recover faster than many anticipate as revenue-starved Gulf producers scramble to regain market share. This could ultimately lead to a bigger price drop than traders are currently pricing in.

TRADING THE TRUMP

Throughout the war, Trump’s jawboning of oil markets was effective, repeatedly boosting investor expectations for a quick resolution even as conditions on the ground deteriorated. The US-Iran deal announced on Sunday was vague and offered limited gains for Washington. But it arrived just as the market was running out of room. Its timing was probably not a coincidence. Investors understood that Trump’s tolerance for market pain had limits, and those limits mattered as much as pipelines, tankers and storage tanks. They bet on it. This time, they were right.

Offshore-banking operations face setbacks following regulatory instructions downsizing the cost-ceiling rate on foreign-currency lending to businesses that dents profitability of commercial banks and may ultimately affect the economy.

As the spread on foreign-currency loans squeezes under the current macroeconomic sluggishness, some of the banks decide to lessen their concentration on offshore-banking operations, with the risk of disruption to trade financing and increase in pressure on the economy, according to the market players.Personal finance e-book

The Foreign Exchange Policy Department-1 (FEPD-1) of Bangladesh Bank earlier on May 11 issued a circular lowering the all-in-cost ceiling on short-term trade finance to the benchmark rate plus 3.0 per cent from 4.0 per cent.

Under the revised rule, the borrowing cost for short-term permissible trade finance in foreign currencies will be capped at a maximum of 3.0 per cent per annum over benchmark rates, including SOFR (Secured Overnight Financing Rate) and Euribor,

All in costs includes interest, commissions, fees and other charges associated with such trade and term financing in foreign currency.

Seeking anonymity, a BB official says, the central bank issued the latest instruction aiming to bring borrowing costs in line with global market trends.

He says many of the commercial banks can borrow foreign currency from the correspondent banks at rates in-between 2.20 per cent and 2.50 per cent per annum over the benchmark rates. "So, the spread (0.80 per cent to 0.50 per cent) is still lucrative as far as businesses concerned. But we want to reduce the import costs," the central banker adds.

According to market insiders, the market size of offshore banking operations is around $6.0 billion. By end of 2025, the major market players were BRAC Bank ($877 million), Prime Bank ($608 million), Pubali Bank ($464 million), Eastern Bank ($436 million), City Bank ($427 million) and Bank Asia ($238 million).

Shortly after the issuance of the circular by the banking regulator, the Association of Bankers, Bangladesh (ABB) requested the central bank to reconsider the recently revised all-in-cost ceiling for short-term import- trade finance in foreign exchange, warning that the new pricing framework could disrupt trade financing and increase pressure on the country's economy.Market trend analysis

In a letter to BB Governor Mostaqur Rahman, the ABB expressed concerns over the circular which fixed the ceiling for short-term import-trade finance at the benchmark rate plus 3.0 per cent per annum.

According to the apex body of the country's top commercial bank executives, commercial banks are heavily dependent on offshore borrowings and interbank foreign-currency markets because of the country's limited foreign-currency deposit base.

The prevailing market conditions and sovereign-risk premium have pushed the cost of foreign- currency funding close to the newly imposed ceiling, leaving little room for banks to operate profitably, the bankers argue.

Currently, well-rated private commercial banks secure short-term trade base financing in foreign currency lines at approximately SOFR+2.75 per cent. Once statutory costs are incorporated, the effective all-in cost rises to approximately SOFR+3.00 per cent for the banks.

Additionally, the funding cost exceeds SOFR+3.00 per cent in securing long-term funding, when upfront-arrangement fees on term facilities are amortized.

"In practice, the entirety of funds from long-term borrowing may not be exactly matched with long-term lending book. Banks often have to utilize these funds for short-term financing as well," the letter reads.Regional business directory

Unfortunately, banks face challenges to negotiate expected price with foreign counterparties at current country rating. With the imposed revised pricing level, the banks may face new challenges. It may result in banks not being able to adequately facilitate short-term financing needs of customers,

To address the issue, the ABB proposes two alternatives. The first recommendation calls for a phased reduction in the ceiling over a transition period, allowing banks sufficient time to adjust their funding structures and complete ongoing negotiations. The second proposal suggests setting the ceiling at benchmark rate plus 3.50 per cent and deferring its implementation by at least six months.

On condition of not being quoted by name, the offshore banking head of a private commercial bank says only three to four banks can make profit in doing offshore-banking business after the sharp reduction in the ceiling but majority will not be able to sustain.

"In fact, our bank decides to lessen concentration on the business as it will not be viable for us under the current circumstances," he told The financial Express.

Managing Director and Chief Executive Officer of Mutual Trust Bank (MTB) Syed Mahbubur Rahman says the 1.0-percentage-point reduction in the ceiling will certainly hit profitability in banks at a time when the space of making profit keeps squeezing due to prolonged economic sluggishness.Personal finance e-book

He says there are many banks that may lose interest as they will not be able to make some gains in offshore-banking business. "So, the income that the local banks can book would go outside and it will put more pressure on local currency," the experienced banker alerts.

ABB Chairman Mashrur Arefin says they have already sent a letter explaining the market situation to the central bank governor to reconsider the matter.

"We'll soon meet the BB governor with this serious issue," informs Mr. Arefin, also Managing Director and Chief Executive Officer of City Bank PLC.

Bangladesh could attract up to $100 million in investment through a proposed Orange Climate Fund as policymakers, investors and market leaders push for the development of a stronger, inclusive financial ecosystem to support sustainable and climate-resilient economic growth.

The investment prospect emerged at the Orange Economy Summit 2026 held in the capital on Tuesday, where stakeholders highlighted the growing role of innovative financing instruments and impact investment in mobilising long-term capital for Bangladesh's development priorities.

The summit, jointly organised by the Dhaka Stock Exchange (DSE), Impact Investment Exchange (IIX) and the Policy Research Institute of Bangladesh (PRI), focused on building Bangladesh's Orange Capital Ecosystem, expanding inclusive finance and attracting global capital to support the country's economic transformation, according to a press release.

Bangladesh Bank Deputy Governor Dr Md Habibur Rahman attended the event as chief guest. Senior government officials, regulators, representatives from financial institutions, corporate entities, development partners and international experts also participated.

Speaking at the summit, IIX Founder and Chief Executive Officer Professor Durreen Shahnaz said Bangladesh has been identified as a priority market under IIX's proposed $1 billion Orange Climate Fund, with plans to channel $100 million into the country.Market trend analysis

Bangladesh's graduation from least-developed country (LDC) status and its ambition to become a trillion-dollar economy would require a stronger and more inclusive financial market capable of attracting long-term investment, she said.

"Bangladesh has immense opportunities in sectors such as ready-made garments, agriculture, renewable energy and financial services," she said, adding that deepening the capital market is critical to unlocking these opportunities.

She described the Orange Movement as a global initiative aimed at building inclusive capital markets and mobilising $10 billion by 2030 through innovative financing structures that combine financial returns with measurable social and environmental impact.

Prof Shahnaz said IIX has facilitated more than $18 million in investments in Bangladesh over the past decade and supported the issuance of the country's first Orange Bond.

In his welcome remarks, DSE Managing Director Nuzhat Anwar said sustainable development requires a balance between economic growth, social inclusion and climate resilience.

She said the stock exchange remains committed to promoting sustainable finance, strengthening corporate governance and aligning with international standards.

Presenting a keynote paper, PRI Chief Economist Dr M Ashiqur Rahman said Bangladesh faces significant challenges in employment generation, climate adaptation and productivity enhancement as it moves towards becoming a trillion-dollar economy.Personal finance e-book

He observed that structural constraints in banking, capital markets, bond markets and venture capital financing continue to limit the availability of long-term funding for productive sectors.

Against this backdrop, he argued that orange capital could serve as an innovative financing framework capable of directing investment toward sectors that generate economic, social and environmental benefits simultaneously

Deputy Governor Dr Habibur Rahman said Bangladesh Bank has undertaken various initiatives to strengthen financial inclusion and women's economic empowerment.

Dr Rahman reaffirmed the central bank's support for efforts to attract orange investments and underscored the importance of positioning Bangladesh as a preferred destination for sustainable and impact-oriented capital.

Referring to the country's first Orange Zero-Coupon Bond issued through Sajida Foundation, he described the initiative as a landmark achievement for Bangladesh's capital market and a significant step toward developing a broader impact-investment ecosystem.

With over 33,000 tax cases clogging appellate forums and tying up more than Tk1.10 lakh crore, the government has finally moved towards regional standards by cutting income tax and VAT appeal deposit requirements down to as low as 14% and 4%, respectively.

Businesses have welcomed the government's aggressive cuts to tax and VAT appeal deposits in the fiscal 2026-27 budget as it will boost their much-needed cash flow. However, fiscal experts cautioned that significantly lower deposits could inadvertently trigger a wave of prolonged litigation.

In 2018, the National Board of Revenue accused a company of evading Tk925 crore in VAT after auditing four years of its financial records. The company disputed the claim and challenged it before the VAT Appellate Tribunal and later in court, arguing that the audit was flawed. However, before its appeal could be heard, the company was required to deposit nearly Tk200 crore in two instalments.

Eight years later, the dispute remains unresolved. While the company has yet to be found guilty of tax evasion, the capital tied up in the legal process has doubled to nearly Tk400 crore when financing costs and interest expenses are considered.

"We had to borrow from banks to make the deposits. The case is still pending and we don't know when it will be resolved. Meanwhile, a significant amount of capital remains locked up, creating cash-flow pressures," a senior company official told The Business Standard.

Business leaders say the move could unlock crores of taka in working capital, reduce litigation costs and improve Bangladesh's investment climate.

Under the proposed Finance Bill, the cumulative deposit required for income tax appeals from the Commissioner (Appeals) to the High Court has been reduced from 35% of the disputed tax amount to 14%.

Infograph: TBS
Infograph: TBS

For VAT and customs disputes, the total deposit requirement has been reduced even more sharply from 20%-30% to only 4%.

At the tax tribunal stage, the deposit requirement has been cut from 10% to 2%, while High Court appeals will require significantly lower deposits than before.

The reforms are part of a broader government initiative to simplify tax administration, reduce the discretionary powers of tax officials and improve the ease of doing business.

In his budget speech, Finance Minister Amir Khosru Mahmud Chowdhury said the government is undertaking major reforms in the VAT system to make services more accessible to taxpayers and increase transparency in tax administration.

"Reducing the complexity and cost of tax dispute resolution will lessen financial and psychological burdens on businesses, which will ultimately support investment, production and employment generation," he said.

Businesses welcome long-awaited reform

Business chambers and foreign investors have long argued that Bangladesh's appeal deposit requirements were among the highest in the region and often discouraged taxpayers from pursuing legitimate appeals.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce and Industry, described the reform as a long-awaited breakthrough.

"This has been one of the most consistent demands from the business community. Companies were forced to keep large amounts of capital tied up for years while cases remained unresolved. The reduction in deposit requirements will significantly improve cash flow and investor confidence," he said.

Md Rezwan Bin Rafique, head of taxation and fiscal compliance at Grameenphone, welcomed the reduction in the statutory appeal deposit requirement under both the income tax and VAT laws.

He said, "In Bangladesh, tax and VAT disputes often remain pending in the legal forum for several years. The previous appeal deposit requirements were creating significant cash flow pressures for taxpayers while disputes were under adjudication.

"The proposed reduction is a positive policy measure that will improve access to the appeal process, facilitate taxpayers' ability to exercise their legal right to appeal, and contribute to a more balanced and efficient dispute resolution framework."

Tax experts have broadly welcomed the reforms but warned that lower deposits could encourage some businesses to prolong disputes unnecessarily.

"Reducing the complexity and cost of tax dispute resolution will lessen financial and psychological burdens on businesses, which will ultimately support investment, production and employment generation."

Snehasish Barua, partner at Snehasish Mahmud & Co, said the success of the reforms would depend on taxpayer behaviour and faster case resolution.

"There is a possibility that some taxpayers may use the lower deposit requirements to keep disputes alive for longer periods. Businesses should not view the reform as an opportunity to delay legitimate tax payments," he said.

"What is equally important is ensuring that appeal cases are resolved within a reasonable timeframe."

Tax practitioners estimate that some cases currently remain pending for seven to 15 years before reaching final resolution.

Taskin Ahmed, president of the Dhaka Chamber of Commerce and Industry, said the proposed changes address a longstanding concern of businesses.

"Capital is the lifeblood of business. When a company has to lock up large sums of money for years before its case is heard, that capital cannot be used for expansion, innovation or job creation. Reducing appeal deposits is a positive step toward building a more investment-friendly tax system," he said.

According to Taskin, the reform aligns with broader efforts to improve Bangladesh's competitiveness as it prepares for LDC graduation and seeks to attract more foreign direct investment.

In many developed economies, including the United Kingdom, Australia and Singapore, taxpayers can challenge tax assessments without making large upfront deposits. Instead, authorities rely on risk-based enforcement, penalties for non-compliance and efficient dispute resolution systems.

According to tax policy experts, modern tax systems increasingly focus on quick dispute resolution rather than using high deposits as a deterrent against appeals.

Senior officials at the NBR say the reform is intended to ensure access to justice without compromising revenue interests.

"The objective is to create a fairer appeals process. Taxpayers should have the opportunity to challenge assessments without facing excessive financial burdens. At the same time, safeguards remain in place to prevent frivolous appeals," an official said.

Digitalisation and reduced discretionary powers

Beyond appeal reforms, the proposed budget introduces several measures aimed at modernising tax administration and reducing discretionary power.

Beginning in FY27, electronic VAT return submission will become mandatory, similar to income tax returns.

The government has also proposed simplified VAT return forms for small taxpayers, allowing them to file returns online using limited information.

At the same time, provisions have been included to reduce discretionary powers previously exercised by tax officials and commissioners.

Business leaders say these reforms could help reduce compliance costs, improve predictability and minimise taxpayer harassment.

NBR officials said reducing discretionary powers of tax officials would improve transparency and reduce opportunities for inconsistent decision-making.

The Dhaka Stock Exchange ended lower today (16 June), snapping a three-day winning streak as investors moved to lock in profits following a strong post-budget rally that had pushed the benchmark index above the 5,600-point mark.

The benchmark DSEX index of the premier bourse plunged by 35 points, or 0.62%, to close at 5,605, reflecting a cautious shift in investor sentiment after three consecutive sessions of robust gains.

Market analysts observed that while there was selective bargain hunting in attractively valued scrips, it proved insufficient to counter the broad-based selling pressure that intensified as the session progressed.

The blue-chip segment also faced a sharp correction, with the DS30 index slipping by 17 points to settle at 2,110.

Trading activity saw a noticeable contraction, with total turnover on the DSE dropping by 18% to Tk1,196 crore, compared to the previous day's Tk1,456 crore.

According to EBL Securities' daily market review, the market remained volatile throughout the day as participants remained active on both sides of the trading fence.

However, significant corrections in influential large-cap stocks eventually weighed down the indices, pulling the bourse into negative territory by the closing bell.

Sheltech Brokerage noted in its daily report that the market movement was primarily shaped by profit-taking after the recent advance. While the session opened with modest buying interest and several recovery attempts, selling pressure gradually became dominant through the mid-session.

It added that the volatility reflected a selective and cautious approach among investors, many of whom appear to be waiting for clearer signs of market stability before committing to large-scale fresh investments.

The market breadth remained bearish, with 240 issues declining against only 109 advancing, while 47 scrips remained unchanged on the DSE floor.

On the sectoral front, the textile sector emerged as the turnover leader, accounting for 19.4% of the day's total volume. This was followed by the banking sector at 12.4% and the general insurance sector at 11.7%.

In terms of returns, the miscellaneous sector faced the steepest decline of 4.1%, driven largely by a heavy sell-off in specific large-cap scrips. The banking and paper sectors also saw significant corrections of 1.5% and 1.4%, respectively.

In contrast, the services sector provided a rare bright spot with a 1.6% gain, while the textile and mutual fund sectors also managed to post marginal positive returns.

Among individual stocks, ICB Employees Provident Mutual Fund topped the gainers' list with a 10% price surge, followed by National Feed Mill, VFS Thread, and BD Thai Aluminium.

In terms of liquidity, Summit Alliance Port was the most traded stock with a turnover of Tk63.20 crore, followed by NCC Bank and IPDC Finance.

On the losing end, Beximco Limited hit the lower circuit breaker, shedding 9.98% of its value, while Midas Finance and Sunlife Insurance also featured among the top losers of the day.

The bearish sentiment was mirrored at the Chittagong Stock Exchange (CSE), where the Selective Categories' Index (CSCX) ended 83 points lower at 9,340.

The broad CASPI index at the port city bourse dropped by 123 points to settle at 15,271, while turnover declined by 27% to stand at Tk31 crore.

Bangladeshi banks have emerged as the weakest in South Asia in their ability to absorb financial shocks, after a large volume of previously hidden bad loans came to light following the fall of the Awami League-led government in August 2024.

As these losses surfaced, capital buffers of banks were eroded, pushing their capital adequacy ratio into negative territory by the end of 2025, according to Bangladesh Bank’s latest Financial Stability Report yesterday.

The capital adequacy ratio, also known as the Capital to Risk-Weighted Assets Ratio (CRAR), measures how much money a bank holds as a safety cushion against risky lending. In simple terms, it shows whether a bank has enough capital to absorb losses if borrowers fail to repay loans. A negative ratio means losses have wiped out that buffer entirely.

At the end of 2025, Bangladesh’s CRAR stood at minus 2.64 percent. By comparison, it was 17.20 percent in India as of September last year, 19.40 percent in Sri Lanka, and 20.80 percent in Pakistan at the end of 2025.

Under international Basel III rules, banks are expected to maintain a minimum capital adequacy ratio of 10 percent, plus an additional 2.5 percent buffer to protect against financial stress. Bangladesh is now far below that threshold.

The central bank report shows that Bangladesh’s banking sector was relatively stronger until 2023, but its financial position deteriorated drastically from 2024 after the political changeover.

In 2024, the sector’s capital adequacy ratio stood at 3.08 percent, compared with 16.7 percent in India, 20.6 percent in Pakistan and 18.4 percent in Sri Lanka.

Banking sector insiders say the collapse shows years of irregularities and large-scale financial scams during the Awami League government, which led to massive losses that were not fully disclosed at the time.

Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank and a former chairman of the Association of Bankers, Bangladesh (ABB), said the capital position of the banking sector has turned negative due to widespread financial scams.

According to Rahman, a number of banks have also availed themselves of regulatory deferral facilities. These are temporary measures that allow banks to delay recognising losses or meeting certain regulatory requirements, often used to ease short-term pressure on their balance sheets.

He said the situation could worsen further once these facilities are withdrawn or expire.

Bangladesh’s banking sector has long operated with lower capital levels than its regional peers, averaging around 11 percent in recent years. However, the ratio saw a steep decline of more than 8.5 percentage points from 11.64 percent a year earlier to minus 2.64 percent at the end of December 2025.

At the end of 2025, some 42 banks remained compliant with Basel III requirements, together accounting for more than 60 percent of total banking sector assets, according to the report.

It said the overall decline was driven mainly by weak capital positions in Islamic private commercial banks, specialised development banks and several state-owned banks.

Non-performing loans (NPLs), loans on which borrowers have stopped making repayments, were the central pressure point.

At the end of last year, bad loans in the sector stood at Tk 557,217 crore, or 30.60 percent of total loans. By March this year, the amount had risen further to Tk 588,704 crore, or 32.26 percent, according to Bangladesh Bank data.

Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM) and a former chief economist of the Bangladesh Bank, said the negative capital adequacy ratio pointed to deep structural weaknesses in the sector.

“The latest figures indicate that the sector’s health has deteriorated further compared to previous years. The problems are becoming increasingly severe and harder to resolve,” said Mujeri.

He added that the scale of damage has built up over many years.

“If policymakers want to restore the banking sector to a healthy and sustainable position, there is no alternative to taking strong and decisive corrective measures,” said the former BB economist.

Meanwhile, Mutual Trust Bank CEO Rahman said the current government has taken office at a difficult time, with the financial sector’s weakness adding to its challenges. “Therefore, the government must take the matter seriously. There appears to be no alternative to recapitalisation, but the government itself lacks the necessary funds.”

Recapitalisation refers to the process of injecting fresh capital into banks to restore their financial stability after losses. In practice, it usually involves government support or mergers between weak lenders.

In his budget speech last week, Finance Minister Amir Khosru Mahmud Chowdhury said that the government is spending around Tk 40,000 crore in the current fiscal year to recapitalise weak banks to restore discipline and stability in the banking sector.

He said Tk 20,000 crore of that amount was allocated to Sammilito Islami Bank, formed through the merger of five troubled lenders.

Rahman said broader structural reforms, including bank mergers and other resolution mechanisms, would be needed to stabilise the sector.

He pointed to Greece as an example of a country that faced a similar banking crisis but managed recovery through large-scale recapitalisation backed by the European Union.

Bangladesh, he added, does not have the same fiscal capacity.

Bangladesh’s leather sector is widely recognised as one of the country’s key export industries. Yet beneath this success lies a largely overlooked reality: a significant portion of the industry’s material flow ends up as low-value or hazardous waste despite being rich in recoverable resources such as collagen, proteins, fats, fibres and chromium compounds. Millions of hides processed annually generate tens of thousands of tonnes of tannery solid waste that remains largely underutilised. This waste stream is not merely a disposal burden but a continuous supply of valuable raw materials capable of supporting high-value industries.

In many developed economies, similar by-products are integrated into profitable secondary industries, forming the foundation of circular bioeconomies. In Bangladesh, however, these materials remain fragmented, informally handled and largely excluded from mainstream industrial planning. As a result, opportunities for value addition, import substitution and industrial diversification remain untapped. A key concern is the country’s growing dependence on imported products that could potentially be produced domestically from tannery waste, including collagen peptides, pharmaceutical-grade gelatine, cosmetic ingredients, organic fertilisers and biodiesel feedstocks. This reliance causes a continuous outflow of foreign currency and exposes the economy to external price volatility. At the same time, Bangladesh exports comparatively low-value semi-processed leather. Developing a domestic tannery waste valorisation industry would help substitute imports with local production and strengthen economic self-reliance.

The environmental situation is also becoming increasingly critical. Recent assessments indicate that more than 8.5 million hides and skins processed annually generate around 30,500 tonnes of tannery solid waste, including fleshing, trimmings, chrome shaving dust, buffing dust and leather scraps. With improved environmental compliance and certifications such as Leather Working Group (LWG) approval, tannery utilisation at Savar could rise from 30-40 percent to 90-95 percent. While this would improve export competitiveness, it would also increase waste generation to 60,000-90,000 tonnes a year. This expansion carries major climate implications. Organic tannery waste decomposes under anaerobic conditions in landfills, releasing methane, a greenhouse gas far more potent than carbon dioxide. Without intervention, emissions will increase significantly as production scales up.

Environmental impacts extend beyond greenhouse gases. Leachate from decomposing waste contaminates soil and groundwater, threatening water safety and reducing agricultural productivity. Chromium-containing waste, particularly shaving dust and wet-blue trimmings, poses additional risks through improper handling and unethical use in poultry and fish feed. Open dumping contributes to air pollution, foul odours and public health concerns around industrial zones such as Savar. Despite these challenges, tannery waste presents a strong opportunity for integration into global high-value markets. Demand for bio-based products is expanding rapidly in cosmetics, pharmaceuticals, renewable energy, sustainable materials and agriculture. Collagen-based products alone represent a multi-billion-dollar global industry.

Formal recognition of tannery waste valorisation as an independent industrial sector is therefore essential. At present, it exists without dedicated policy support, industrial classification or investment frameworks. Proper recognition would enable structured development, policy incentives and improved access to financing, strengthening Bangladesh’s transition towards a circular economy. The sector also offers strong potential for private investment across bio-refineries, renewable energy plants, biochemical processing, pharmaceutical and cosmetic intermediates, and organic fertiliser production. With rising global demand for sustainable products, early investment could position Bangladesh as a regional hub for green industrial development. Public-private partnerships, foreign direct investment and technology transfer will be essential.

Ultimately, the future of Bangladesh’s leather industry will depend on whether it continues with a linear production model or transitions to a circular, resource-efficient system.

The first budget under the newly elected BNP government sets ambitious revenue targets that may prove difficult to achieve, given the country’s persistent constraints in tax collection and uneven progress in implementing reforms, according to Fitch Ratings.

In a report today, the ratings agency said the budget for financial year 2026-27 aims to raise the revenue-to-GDP ratio to 10.2 percent from around 8 percent in FY26. If achieved, it would mark Bangladesh’s highest ratio since 1993.
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Fitch said revenue collection would be the main test of the budget’s credibility. The government is targeting 18 percent nominal revenue growth year-on-year while planning to increase spending by 19 percent.

Measures proposed to boost collections include simplifying tax procedures, reducing tax exemptions, easing value-added tax compliance for small and medium-sized enterprises, and increasing non-tax revenue from state investments in state-owned enterprises, corporations and banks.

How the proposed budget reinforces an unequal tax structure
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How the proposed budget reinforces an unequal tax structure

While these initiatives could broaden the tax base over time, Fitch said weak implementation has limited the effectiveness of previous reform efforts.

The pressure to meet revenue targets is heightened by the government’s spending commitments. Social protection and related programmes account for 29.7 percent of total expenditure, while physical infrastructure makes up 18.7 percent, reflecting the government’s election pledges.

However, Bangladesh’s history of underspending could help contain the fiscal deficit if implementation again falls short of budget plans, said Fitch.

The rating agency said measures aimed at the energy sector could support medium-term growth if carried out effectively.

More than 40 percent of the country’s electricity generation capacity is gas-based, and the budget prioritises domestic gas exploration, efficiency improvements across generation and distribution, and stronger infrastructure to support liquefied natural gas supplies.

In the face of a global energy volatility triggered by the war in the Gulf, Bangladesh has requested a new programme from the International Monetary Fund (IMF).

Fitch noted that completing the final review of the current arrangement, which expires in January 2027, appeared unlikely.

It added that reaching agreement on a reform agenda could take time, meaning the credit implications of the FY27 budget would depend largely on whether the government could improve revenue mobilisation and investment execution.

The agency also questioned the government’s growth assumptions.

The authorities expect the economy to expand by 6.5 percent in FY27. Fitch, however, forecasts growth of 3.5 percent, citing continued fragility in the banking sector, weak private-sector credit growth, shortcomings in the policy framework and an uncertain external environment that continues to weigh on investment.

Fitch kept its FY27 fiscal deficit forecast unchanged at 3.6 percent of GDP, matching the government’s target. However, the agency said this reflects expectations of both lower revenue and lower expenditure than projected in the budget.

Fiscal performance in FY26 illustrated that pattern.

The revised deficit estimate for FY26 is reduced to 3.3 percent of GDP from the original 3.6 percent, supported by lower-than-expected spending disbursements. Revised revenue estimates are slightly above the budget target.

Fitch said this reduces the risk of near-term slippage on the headline deficit, but also underlines how difficult it may be to implement the FY27 budget in full.

Over the medium term, the agency said improvements in revenue collection and economic growth would depend on whether the government could deliver reforms more effectively than in the past.

New tax regime may hit middle class hardest
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New tax regime may hit middle class hardest

The authorities aim to raise the revenue-to-GDP ratio to 11 percent by FY30-FY31, increase total investment to 40 percent of GDP and lift foreign direct investment to 2.7 percent of GDP. These measures are intended to boost real GDP growth to 8.5 percent while bringing inflation down to 5 percent.

The budget includes several initiatives intended to support investment and export growth.

The government has reduced withholding tax on machinery rental payments to non-residents to 7.5 percent from 15 percent, highlighted bridge and expressway projects, and continued to promote public-private partnership initiatives.

It has also retained the 2.5 percent cash incentive for remittances sent through formal channels and extended duty-free import facilities and bank guarantees for raw materials and intermediate goods to encourage export diversification beyond the ready-made garment sector.

The stagnation that has persisted in the rural economy for several years has intensified further. The flow of bank credit to rural areas has consequently continued to contract. Outstanding bank loans in the rural economy have not increased over the past year; instead, they have declined by more than BDT 45 billion, according to the central bank data. At the end of March 2025, outstanding bank loans in rural areas stood at around BDT 1.36 trillion. By March this year, that figure had fallen to around BDT 1.32 trillion.

The slowdown in the rural economy comes at a time when the country is receiving the highest remittance inflows in its history. Up to June 14 of the current fiscal year, expatriate Bangladeshis sent home $34.30 billion in remittances. In local currency terms, this amounts to more than BDT 4.22 trillion. A significant share of these remittances has flowed into rural areas. Since migrant families spend roughly two-thirds of remittance income on consumption, rural economic activity and demand for credit would normally be expected to strengthen.

Bankers, however, say that the rural economy has become largely subdued. The economic slowdown has forced many cottage, micro, and small industrial units in rural areas to shut down, while new ventures are not emerging. Demand for loans in rural areas consequently remains weak.

Many economists and stakeholders offer a different explanation. They argue that most banks lack the capacity to effectively extend credit to the rural economy. Despite years of urging, banks have failed to develop such capabilities. Initiatives introduced in the name of financial inclusion, such as agent banking and sub-branches, have primarily been used to mobilise deposits rather than expand lending. The ongoing crisis and instability in the banking sector have also negatively affected rural credit disbursement. To meet agricultural and rural lending targets set by the central bank, banks have become heavily dependent on microfinance institutions.

The main issue is a lack of demand for credit in the rural economy, said Mashrur Arefin, chairman of the Association of Bankers, Bangladesh (ABB). Speaking to Bonik Barta, the Managing Director of City Bank PLC, said: “Private-sector credit growth in the country has fallen to the range of 4 percent. In my entire banking career, I’ve never seen loan demand this low. If demand for credit is weak in urban areas, it’s not unusual that it has declined even further in rural areas. Many banks currently don’t even have the capacity to extend new loans. State-owned banks maintain a large branch network in rural areas, and we’re seeing stagnation in their credit growth as well.”

Mashrur Arefin noted City Bank is working to expand retail and small-scale lending through the extensive use of technology. “Through the MFS platform bKash, we’re providing unsecured digital nano loans ranging from BDT 500 to BDT 50,000. The outstanding balance of these microloans has now exceeded BDT 65 billion. Bangladesh Bank has announced new targets for agricultural and rural lending, along with several incentive packages. With political stability and a newly elected government having announced the budget, we hope that both the rural economy and the overall economy will recover quickly,” he further said.

Bangladesh Bank publishes Scheduled Banks Statistics every quarter, containing a wide range of banking-sector data. The latest edition shows that the total outstanding bank credit stood at around BDT 17.83 trillion at the end of March this year. Of this, around BDT 16.51 trillion was disbursed in urban areas, accounting for 92.59 percent of total bank lending. In contrast, outstanding credit in rural areas stood at only nearly BDT 1.32 trillion, representing just 7.41 percent of total bank loans, despite the rural economy contributing more than 30 percent to the country’s GDP.

Banks also collected nearly three times more deposits from rural areas than the amount of loans they disbursed there. At the end of March this year, outstanding rural deposits stood at approximately BDT 3.43 trillion, compared with around BDT 3.01 trillion in March 2025. This means rural deposits increased by BDT 424.80 billion over the past year. But outstanding bank credit in rural areas declined by BDT 46.12 billion during the same period.

Agricultural loans are also included within the total outstanding credit disbursed in rural areas. Outstanding agricultural loans stood at BDT 636.30 billion as of March this year, according to Bangladesh Bank data. But rather than increasing, the figure fell to BDT 632.47 billion in April. Banks have also become almost entirely dependent on microfinance institutions for the disbursement of agricultural loans.

Deposits collected from rural areas could have transformed the economy if they had been reinvested as loans within the same localities, believes Syed Mahbubur Rahman, managing director of Mutual Trust Bank. Speaking to Bonik Barta, he said, “It’s quite difficult for banks to deliver credit to the rural economy. Most banks lack both the capacity and the infrastructure required to extend such loans. Banks have consequently become dependent on NGOs for the disbursement of agricultural and rural credit.”

Regarding local lending, he said, “Services such as agent banking and sub-branches were introduced to promote financial inclusion. But marginalised communities haven’t yet fully benefited from these services. This is because banks are still using agents and sub-branches primarily to mobilise deposits. If the deposits collected from a particular area could be reinvested there as loans, the rural economy would become much more vibrant. Rural employment would increase as well. The opportunity hasn’t yet been lost. We’re trying to reach underserved communities through technology.”

Bangladesh has been experiencing high inflation for several years, while economic growth has slowed. GDP growth stood at 4.22 percent in FY 2023–24. It declined to 3.49 percent in FY 2024–25 and is projected to reach 4.14 percent in the current fiscal year. The inflation rate, meanwhile, stood at 9.42 percent in May, well above the target of reducing inflation to 6.5 percent set in the monetary policy.

Alongside economic stagnation, Bangladesh’s banking sector is also facing ongoing stress and instability. During the first quarter of the current year (January–March), non-performing loans (NPLs) increased by BDT 314.87 billion. By the end of March, total NPLs in the banking sector had reached around BDT 5.88 trillion, accounting for 32.26 percent of all outstanding loans.

The lending capacity of at least two dozen banks has become severely constrained. Even banks with excess liquidity or sufficient funds for lending aren’t extending adequate credit to entrepreneurs. Instead of increasing lending to the private sector, banks are showing greater interest in purchasing government Treasury bills and bonds. While private-sector credit growth has consequently fallen to 4.75 percent, credit growth to the government has exceeded 30 percent.

Former Chief Economist of Bangladesh Bank, Dr Mustafa K Mujeri, believes that survival itself has become increasingly difficult for rural entrepreneurs. Speaking to Bonik Barta, also the executive director of the Institute for Inclusive Finance and Development (InM), said, “The pressure of high inflation has made it extremely difficult for rural entrepreneurs to stay afloat. The decline in credit flows is also delaying their prospects of recovery and affecting their employment. Jobless people from rural areas are now migrating to cities. Banks and financial institutions need to become more proactive in providing credit in rural areas. The government must also come forward in this regard.”

The banks’ inability to adequately serve rural borrowers has led to the rapid expansion of microfinance institutions. The outstanding loan portfolio of 719 microfinance institutions, including Grameen Bank, has now reached BDT 2.05 trillion.

Government-supported organisations such as the Palli Karma-Sahayak Foundation (PKSF) and the SME Foundation have also expanded their activities in rural areas. Bangladesh Bank has now established a BDT 50 billion incentive fund for cottage and small entrepreneurs. PKSF has been entrusted with disbursing low-interest loans from this fund.

Commenting on the initiative, PKSF Managing Director Md Fazlul Kader told Bonik Barta, “The rural economy is experiencing a significant slowdown. To overcome this stagnation, microfinance institutions can play a more effective role than banks. PKSF is implementing a range of initiatives to address the situation. In addition to the BDT 50 billion being provided by Bangladesh Bank, another BDT 60 billion is being added through government support and our own financing. We’re working toward disbursing a total of BDT 110 billion in the rural economy. PKSF has more than three decades of successful experience as a catalyst for rural economic development and sustainable growth.”

The Executive Committee of the National Economic Council (Ecnec) yesterday approved a Tk 4,189 crore project to build supporting infrastructure for the Chinese Economic and Industrial Zone (CEIZ) in Chattogram’s Anwara.

Policymakers hope the CEIX will become one of Bangladesh’s largest foreign investment hubs, with project documents showing the zone is expected to attract at least $500 million in foreign direct investment and create more than 100,000 direct and indirect jobs once fully operational.

According to Planning Commission documents, Bangladesh sought a $221.18 million loan from China in 2018 for infrastructure development in the zone, and the Chinese government later agreed to finance the project under the its Preferential Buyer’s Credit (PBC) arrangement.

Of the total cost, Tk 1,722 crore will come from government funds, while Tk 2,467 crore is expected to be financed through loans under the PBC facility.

The project, titled Supporting Infrastructure Project for Chinese Economic and Industrial Zone, is likely to be implemented by the Bangladesh Economic Zones Authority (BEZA) between January 2027 and December 2031.

The CEIZ, being developed under a Bangladesh-China cooperation framework, is designed to attract export-oriented manufacturing investment and strengthen Bangladesh’s integration into regional and global supply chains.

Situated in Anwara on the southern bank of the Karnaphuli river, the economic zone enjoys strategic access to Chattogram Port, the Karnaphuli Tunnel and Shah Amanat International Airport, making it an attractive destination for foreign investors.

The Planning Commission said the project would enhance industrial competitiveness, promote export diversification and facilitate technology transfer through increased Chinese investment.

The project includes construction of a multipurpose jetty, connecting roads and a bridge, along with utility infrastructure such as water storage facilities, a gas pipeline, a central effluent treatment plant and waste management facilities.

It also includes two power substations, around 20 kilometres of transmission lines, and nearly 12 kilometres of boundary walls with security gates.

Planning ministry officials said the project would prioritise land development and installation of essential utilities to make the zone investment-ready.

Planning Secretary SM Shakil Akhter said the first phase would focus on roads, power transmission lines and other services required to attract industrial investors.

Beyond attracting investment, the economic zone is expected to improve the commercial viability of the Karnaphuli Tunnel by generating industrial traffic.

Once factories begin operations, increased movement of raw materials, machinery, cargo and workers between Chattogram city, the port and the industrial zone is expected to raise tunnel usage, which has remained well below initial projections.

Mohammad Mohsin Ul Alam Swapan, vice-president of the Chittagong Chamber of Commerce and Industry, said the economic zone would bring significant economic benefits to southern Chattogram.

“The project’s proximity to the Karnaphuli Tunnel will increase tunnel traffic while easing pressure on Chattogram city,” he told The Daily Star.

“In line with the vision of developing a ‘One City, Two Towns’ model, the economic zone is expected to attract not only Chinese investment but also substantial domestic investment in surrounding areas.”

He said investor interest had already begun to grow around the project, with around 100 small and large enterprises purchasing land near the economic zone to establish factories and industrial facilities.

“The economic zone is also expected to accelerate the transformation of Anwara into a major industrial cluster, complementing existing investments in energy, power and manufacturing projects in the area,” he added.

Currently, around 4,000 vehicles use the tunnel daily, far below the projected demand of 18,500–20,700. The tunnel generates approximately Tk 10-11 lakh in toll revenue per day, while operation and maintenance costs stand at Tk 37 lakh to Tk 38 lakh, leaving a daily deficit of around Tk 26 lakh to Tk 27 lakh.

According to BEZA, more than 100 Chinese companies from sectors including leather, light engineering, medical equipment and chemicals have already expressed interest in establishing factories in the zone.

The project has faced years of delays despite land acquisition for the nearly 800-acre zone being completed under bilateral agreements between Bangladesh and China. Infrastructure development was initially assigned to China Harbour Engineering Company, but the two sides failed to finalise an agreement.

In 2022, China Road and Bridge Corporation was appointed as the new developer and later formed a joint venture with BEZA to move the project forward.

Listed companies have called on Bangladesh Bank to overhaul its credit reporting rules, arguing that financially healthy firms should not be held back by the poor borrowing records of their directors or nominating institutions.

The Bangladesh Association of Publicly Listed Companies (BAPLC) has urged the central bank to implement a more pragmatic Credit Information Bureau (CIB) reporting framework to ensure that financially sound listed companies are not unfairly penalised for the adverse credit records of their nominating institutions or individual directors.

A high-level delegation of the association, led by its President Riad Mahmud, made the request during a meeting with Bangladesh Bank Governor Mostaqur Rahman held at the central bank headquarters in the capital today (16 June).

The meeting focused on resolving critical regulatory bottlenecks that currently hinder the operational flexibility and growth of the country's premier corporate entities.

At the heart of the discussion was the impact of CIB reporting on companies where nominee directors serve.

Under the current practice, if a nominating institution such as a parent company or a financial firm is flagged in the CIB for a default, it often creates significant hurdles for the company where its nominee sits on the board, even if that company is entirely compliant and profitable. The BAPLC delegation emphasised that such "proxy defaults" create undue difficulties in securing credit and maintaining business operations, and called for a fair framework where a company's creditworthiness is judged solely on its own financial health.

Furthermore, the association raised concerns over the systemic challenges faced by large business groups. Currently, the adverse CIB status of a single sponsor, director, or guarantor can effectively freeze the credit facilities of all other entities within the same group.

The BAPLC also requested the Bangladesh Bank to move away from this blanket approach and instead adopt a "balanced and entity-specific" evaluation. They argued that otherwise healthy and compliant entities should not be deprived of financing due to the financial distress or defaults associated with an individual or a sister concern.

Beyond CIB-related issues, the BAPLC leaders advocated for an expansion of the government's newly announced Factory Revival Fund. While they appreciated the initiative to reopen shuttered units, they requested that the facility be extended to include restructured but financially distressed factories that remain operational. These units, according to the BAPLC, often suffer from severe working capital shortages. Providing them with support would sustain industrial operations, protect thousands of jobs, and prevent viable industries from sliding into total operational suspension.

The delegation also observed that the national economy needs to pivot toward the capital market for long-term financing to mitigate the rising risks of non-performing loans (NPLs) in the banking sector. They noted that a greater reliance on equity and debt securities for long-term funding would not only deepen the capital market but also help banks reduce asset-liability mismatches. By diversifying funding sources, the corporate sector could achieve more sustainable growth while lowering the pressure on the banking system.

Despite a proposed increase in the tax-free income threshold, many taxpayers, especially salaried individuals, are likely to face a higher tax burden from the next fiscal year.

In the new budget, Finance Minister Amir Khosru Mahmud Chowdhury has proposed raising the tax-free income limit by Tk 25,000 to Tk 375,000. Although the tax-free income threshold has been raised, much of the relief is offset by three major changes in the Finance Bill 2026.

One of the key proposals is the abolition of the 5 percent introductory tax slab.

Its removal means the lowest post-threshold rate rises to 10 percent, effectively increasing the marginal tax burden for lower-tier earners.

Under the proposed structure, individuals earning up to Tk 300,000 on top of the Tk 375,000 threshold will face a 10 percent tax rate.

An analysis found that a taxpayer earning a gross monthly income of Tk 74,000 could see their tax liability rise by nearly 49 percent in FY27

In the current system, taxpayers earning up to Tk 100,000 above the Tk 350,000 threshold pay only 5 percent.

Another change likely to increase pressure on taxpayers is a reduction in tax benefits linked to eligible investments.

The overall effect will be a higher effective tax burden, especially for higher income groups who rely on rebates to reduce liabilities.

An analysis by SMAC Advisory Services Ltd found that a taxpayer earning a gross monthly income of Tk 74,000 could see their tax liability rise by nearly 49 percent in fiscal year 2026-27, due mainly to slab restructuring and reduced rebate benefits.

During the presentation of the bill on Thursday last week, Khosru also proposed a five-year forward-looking tax framework for individuals, under which the first slab rate has effectively doubled from 5 percent to 10 percent.

The burden is expected to remain relatively high for middle-income people. Those earning up to Tk 100,000 a month will continue to face significantly higher tax outflows under the proposed regime.

By contrast, taxpayers earning more than Tk 250,000 a month will see their overall tax liability rise by around 10 percent, highlighting the uneven impact across income groups, according to SMAC Advisory Services Ltd.

Alongside the slab changes, the bill proposes a cut in the tax rebate available on investments in approved savings and financial instruments.

Currently, taxpayers can reduce their tax liability through investment rebates calculated at 15 percent of eligible investments. The proposal lowers this to 10 percent.

The maximum annual rebate is also set to fall to Tk 7.5 lakh from Tk 10 lakh.

As a result, taxpayers who depend on investment schemes to reduce their tax liability will receive smaller benefits unless they increase eligible investments before June 30, 2026.

“These measures will directly raise the effective tax burden on individual taxpayers, especially certain salaried employees,” said Snehasish Barua, a chartered accountant and tax expert.

The bill also introduces a new condition aimed at encouraging long-term savings. Under the proposal, investments must be held until maturity to qualify for tax benefits. If funds are withdrawn early, the rebate previously claimed will have to be repaid as additional tax in the year of withdrawal.

For instance, if a taxpayer withdraws money from a savings certificate before maturity, they will have to repay the tax rebate.

The annual investment limit for deposit pension schemes (DPS) eligible for tax benefits remains unchanged at Tk 1.2 lakh.

The bill also sets a Tk 5 lakh ceiling on investments in government securities that can be considered for tax rebate purposes.

The proposed measures are a part of the government’s broader effort to raise revenue and reduce the cost of tax incentives.

However, for the first time, the National Board of Revenue (NBR) has proposed an incentive for early tax return submission. Taxpayers who file returns by September 30 will be eligible for a rebate equivalent to 5 percent of payable tax or Tk 25,000, whichever is lower.

If approved by parliament, the changes will take effect from tax year 2026-27.

“Except for taxpayers in the lowest tax bracket, those with annual incomes of up to Tk 375,000, almost everyone else will face a higher tax burden under the proposed measures,” said Towfiqul Islam Khan, additional director (Research) at Centre for Policy Dialogue (CPD).

“The increase will be felt across income groups, but the impact will be more pronounced on the middle class. Although higher-income individuals will also pay more tax, the relative increase in tax liability is larger for middle-income earners.”

He said the changes would dilute the intended relief from inflation, as the purchasing power of middle-income households would come under further pressure.

“This group generally has lower disposable income and limited savings. As a result, their consumption capacity is likely to weaken, which could also affect demand for domestically produced goods and services,” Khan said.

He added that the government’s objective appears to be increasing revenue collection while reducing tax concessions linked to investments.

“The policy seems aimed at preserving incentives for productive and industrial investments, while scaling back the tax benefits individual taxpayers receive through investment-related rebates,” said Khan.

“While the government may have moved away from some of the IMF’s recommendations on reducing tax exemptions, this particular measure will put additional pressure on taxpayers, especially middle-income earners,” he added.

He said a detailed assessment is needed, but the overall direction is apparently clear. “A large number of taxpayers will end up paying more tax despite the increase in the tax-free income threshold,” he added.

Despite Bangladesh Bank's campaign to promote a cashless society, cash remains the dominant mode of payment in the country, accounting for 67.2% of total transactions in 2025, according to the central bank's latest annual report.

Data from Bangladesh Bank's payment systems department shows that digital platforms accounted for 32.8% of total transaction value during the year.

The figures, however, indicate gradual progress. In 2024, cash transactions accounted for 72% of total transactions, with the remainder conducted through digital channels.

According to the report, Tk209 lakh crore out of total Tk311 lakh crore was conducted in cash in 2025, while digital mode shared Tk102 lakh crore.

Digital payments include transactions through systems such as Real Time Gross Settlement, National Payment Switch Bangladesh, Bangla QR, internet banking and mobile financial services.

However, cash withdrawals and deposits through bank branches, ATMs or MFS agents are classified as cash transactions because physical money changes hands.

A transaction remains digital only as long as it stays within the digital ecosystem. Once cash is withdrawn or deposited, it is counted as a cash transaction, said a central bank official.

Informal economy remains a major hurdle

Experts say the persistence of cash reflects the size of the informal economy, where a significant transaction remains outside the formal banking system.

Although mobile financial services, digital banking and QR-based payment solutions have expanded rapidly, many businesses and individuals continue to prefer cash for convenience and to avoid greater financial scrutiny.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, said, "The country's informal sector remains outside the banking system. A large share of economic transactions takes place there in cash, and we have not yet been able to bring these activities into formal financial channels."

Dr Md Zahid Hussain, former World Bank lead economist in Dhaka, said building a cashless society would remain difficult unless the informal sectors are brought under the formal financial system.

"Large businesses in transport, agriculture, and wholesale-retail trade continue to operate outside banking channels. Many of them are reluctant to join the formal system because doing so would expose them to taxation and regulatory oversight," he said.

Infrastructure, trust challenges

Bankers also point to infrastructure constraints as a major barrier to digital adoption.

Many consumers still lack access to smartphones, reliable internet connections or the digital skills needed to use electronic payment systems. Small merchants and rural businesses often lack the infrastructure required to accept digital payments.

Syed Mahbubur said policy support alone would not be enough to accelerate the shift.

"Digital payment systems must become easier, more accessible and more convenient if we want people to adopt them on a larger scale," he said.

Dr Md Touhidul Alam Khan, managing director and CEO of NRBC Bank, said banks face a dual challenge of ensuring security while making digital services simple enough for users with limited digital literacy.

He warned that fraud incidents, failed transactions and complicated interfaces may erode trust and push users back toward cash.

The banker also stressed the need for an inclusive transition, saying the objective should be to expand consumer choice rather than eliminate cash.

Digital payment adoption remains sluggish even as the country continues to bear the substantial costs of a cash-driven economy. According to banking sector estimates, Bangladesh spends between Tk20,000 crore and Tk22,000 crore annually on printing currency notes.

Although Bangladeshis have been eating less rice over the past two decades, public spending remains heavily concentrated on rice production, according to a new World Bank report.

As a result, investments in higher-value farming subsectors such as livestock, fisheries, vegetables and agro-processing are ultimately being discouraged, said the report.

Launched yesterday, the report, titled “Repurposing Agricultural Public Spending for Quality Growth and Jobs in Bangladesh’s Agrifood System”, found that rice occupies around 72 percent of cultivated land and receives about 80 percent of subsidy benefits.

Similar to subsidies, public spending is also heavily skewed towards rice, the report said.

High-value and fast-growing subsectors including livestock, fisheries, forestry, fruits and vegetables contribute nearly three-quarters of agricultural gross domestic product but collectively receive less than 20 percent of public spending support.

“This subsidy and public spending imbalance reinforces a structural bias away from diversification, even as diets and markets continue to shift toward higher-value foods,” the report added.

The report launch was jointly organised by the World Bank and the South Asian Network on Economic Modeling (Sanem) at Sheraton Dhaka.

Speaking at the event, Mansur Ahmed, senior economist at World Bank, said consumer demand is shifting away from cereals towards higher-value products, including fruits, vegetables, fish, livestock products and processed foods.

“A large share of agricultural spending continues to be directed toward fertiliser subsidies and rice-related support, while investments in research, extension services, innovation, market connectivity, and climate resilience remain relatively limited.”

According to Ahmed, as the country’s agri economy evolves, public spending must evolve with it.

The report found that agri research received only 4 percent of total outlays, while knowledge dissemination accounted for 8 percent and irrigation infrastructure 5 percent.

Together, these patterns point to a spending mix that is misaligned with the sector’s potential to support diversification, create better jobs and build a more competitive agrifood economy, according to the report.

Jonaed Shohol, research analyst at the World Bank, said more than 90 percent of agricultural spending is directed toward crops, with rice receiving the overwhelming share of support

“At the same time, livestock, fisheries, and other high-value agricultural activities which offer growing opportunities for income generation, employment, nutrition, and exports receive comparatively limited resources.”

He added that while these policies have contributed to food security gains, they leave limited fiscal space for investments that can drive long-term productivity growth.

The researcher said the challenge is no longer the level of spending but how effectively resources are allocated.

SUBSIDY BENEFITS TILT TOWARDS BIG FARMERS

The report also found that the top 20 percent of landholders receive about half of all fertiliser subsidy benefits in Bangladesh, while the bottom 40 percent receive only 15 percent.

It said fertiliser subsidies remain the largest form of farming support, accounting for about 80 percent of the agri ministry budget.

These subsidies have helped farmers maintain production and price stability. However, because support is linked to the amount of fertiliser purchased, farmers with more land receive a larger share of the benefits, the report said.

The World Bank noted that Bangladesh places a high priority on agriculture, allocating about 10 percent of total public spending to the sector.

“Yet, agricultural growth has slowed, productivity gains have weakened, and diversification into higher-value products has lagged.”

According to the report, correcting these imbalances could substantially raise yields and improve productivity.

The World Bank recommended expanding soil testing, strengthening farmer advisory services and rolling out the Farmer’s Card and e-voucher system so that agricultural support reaches poorer and climate-vulnerable areas.

It said better-targeted support could gradually free up resources for investments that raise productivity, promote higher-value agriculture and benefit poorer farmers.

MAKING SUBSIDIES MORE PRODUCTIVE

Jean Pesme, division director for Bangladesh and Bhutan, said that by modernising subsidy delivery and aligning public spending with emerging opportunities, Bangladesh can build a more resilient and productive agricultural sector while ensuring better value for public resources.

Selim Raihan, professor of economics at Dhaka University and executive director of Sanem, said the composition of agricultural spending has become a central concern.

“A growing share of the budget is allocated to recurrent subsidies, which limits fiscal space for high-return public investments such as research, extension services, irrigation, rural infrastructure, storage, marketing systems, food safety, and climate adaptation. These are the areas that drive long-term productivity growth and structural transformation,” he said.

Food and Agriculture Organization (FAO) Representative in Bangladesh Jiaoqun Shi said Bangladesh faces significant challenges in fertiliser use because of reliance on traditional farming practices, urea-heavy subsidies, limited soil testing and weak extension services.

“Fertiliser use is often guided by generalised recommendations rather than soil-specific nutrient requirements, as access to soil and fertility mapping remains limited. The subsidy structure favours urea, encouraging its overuse while discouraging balanced application of other essential nutrients and organic inputs,” he said.

Uzma Chowdhury, director at the PRAN-RFL Group, said all government departments are working to increase production, but insufficient attention is being paid to market development and distribution systems.

“Without alignment between producers and consumers, market distortions arise. The presence of multiple intermediaries prevents farmers from receiving prices that cover production costs or generate adequate income,” she said.

“Livestock, fisheries, and other sectors operate under different cycles, and even products like salt have distinct supply chains. A uniform policy approach cannot address these diverse needs,” she added.

Agriculture Minister Mohammed Amin Ur Rashid highlighted ongoing efforts to reduce production costs and improve efficiency through better soil management, reduced fertiliser overuse and the expansion of solar-powered irrigation systems.

“We are also working to reduce import dependence in selected commodities such as onions, jute seeds, and ginger through structured medium-term planning,” he said.

Referring to structural challenges in the sector, the minister highlighted issues related to market information gaps, post-harvest losses and price volatility.

“To address these challenges, we are promoting better demand forecasting, decentralised storage solutions, and improved supply chain efficiency to ensure fair prices for farmers and stable access for consumers,” he said.

He also noted efforts to improve soil health and irrigation systems.

Bangladesh's proposed budget is a weak and in parts "unprofessional" fiscal and macroeconomic framework, with its welfare-oriented aspirations undermined by limited implementation capacity and questionable underlying assumptions, says Dr Debapriya Bhattacharya.

The economist, also a distinguished fellow at the Centre for Policy Dialogue (CPD), made the arguments about such budgeting paradoxes while speaking Monday at a Citizen's Platform for SDGs, Bangladesh briefing titled 'National Budget 2026-27: What Is There for the Disadvantaged Citizens?' in the capital.

Dr Debapriya notes that although the policy direction of the budget appears broadly thoughtful and shows sensitivity towards low-income and vulnerable groups, it is "ultimately built on an underdeveloped fiscal structure that risks limiting its real-world impact".

He argues that the macroeconomic assumptions underpinning the budget do not fully align with current economic realities, pointing in particular to inflation, wage dynamics and savings trends.

According to him, FY26 growth of 4.14 per cent has failed to deliver inclusive outcomes as it has not translated into lower prices, meaningful employment expansion or improved earnings for disadvantaged populations.

He also questions the credibility of the inflation target of 7.5 per cent, saying that it appears disconnected from prevailing price trends.

Dr Debapriya further notes that low- and middle-income households are currently under a "triple pressure" of high inflation, stagnant real wages and declining savings, forcing many families to draw down their limited reserves simply to meet basic consumption needs.

He thinks expectations of a rapid economic recovery under the government's recovery, restoration and reconstruction approach are unrealistic within a one-year timeframe, given the structural constraints in key productive sectors.

He draws attention to weakness in major employment-generating sectors, noting that large-scale manufacturing growth fell to 1.76 per cent in FY26, while ready-made garment export earnings declined by 1.9 per cent between July and April, placing additional pressure on a sector that sustains millions of workers, particularly women.

He has stressed that without stronger momentum in agriculture, small and medium enterprises, garments and modern services, the benefits of growth would continue to bypass ordinary citizens.

He observes that past budgets have repeatedly relied on overstretching revenue-collection targets, a pattern he says is being repeated again, raising questions about feasibility in the absence of deeper institutional reform and improved tax governance.

However, Dr Debapriya points out that achieving these targets would require revenue growth of 52.9 per cent from a base that already missed its FY26 target by 22.7 per cent, making the assumptions appear highly ambitious.

He further highlights that around 59 per cent of incremental revenue is expected to come from indirect taxes such as value-added tax, customs duty and supplementary duty, a structure he says raises concerns of tax equity because such taxes affect consumers uniformly regardless of income level.

Value-added tax alone accounts for 32.9 per cent of the FY27 revenue target and 41.2 per cent of the incremental revenue, which he argues places disproportionate pressure on lower-income households.

He also warns that adjustments in VAT on essential goods and services, including LPG cylinders, restaurant meals and construction materials, could further increase cost-of-living pressures.

In addition, he notes, individuals earning between Tk 31,250 and Tk 37,500 per month may face higher marginal tax rates, adding to the fiscal burden on sections of the middle class already affected by inflation and weak income growth.

While critical of the fiscal structure, the economist acknowledges that the budget reflects a notable increase in social-sector prioritisation. According to the Citizen's Platform analysis, 59.5 per cent of incremental spending has been directed towards education, health and social protection, and social-protection expenditure has risen to 2.11 per cent of GDP and 15.39 per cent of the total budget, marking its highest level on record.

He notes that the government has consolidated social-security programmes from 95 to 90 and expanded Government-to-Person digital payments, now reaching over 32.6 million beneficiaries across 29 programmes, alongside the introduction of initiatives such as the Family Card and Farmer Card.

These steps, he says, indicate a policy shift towards welfare orientation, although he cautions that weak implementation capacity could limit their effectiveness.

He further points out that civil service pensions alone account for 24.51 per cent of total social-protection spending, which in effect reduces the fiscal space available for broader vulnerable populations.

He also mentions persistent gaps in coverage for informal-sector workers, climate-affected communities, indigenous people, Dalit population, persons with disabilities, third-gender communities and urban slum-dwellers, many of whom remain insufficiently targeted by existing programmes. The analyst also criticises the absence of unemployment insurance and the continued lack of a dedicated social-protection framework for informal workers, despite their large share in the labour market.

On external financing, Dr Debapriya cautions that the planned borrowing of around US$9.5 billion from institutions, including the International Monetary Fund, the World Bank and the Asian Development Bank, requires careful scrutiny to ensure that associated conditions do not adversely affect marginalised communities.

He also reiterates that energy subsidies are necessary but warns that the mechanisms for delivering such subsidies remain unclear. He further argues that wealth and inheritance taxes remain underutilised as potential revenue sources, while reliance on indirect taxation continues to dominate fiscal strategy.

At the same time, he says, increased taxation on savings instruments and financial assets risks discouraging small savers who depend on these instruments for financial security.

The High Court has directed the Bangladesh Securities and Exchange Commission (BSEC) to take necessary steps within one month to resolve complications surrounding the utilisation of unused initial public offering (IPO) funds of listed export-oriented textile manufacturer Ring Shine Textiles Ltd.

The company formally informed BSEC of the court's Rule Nisi through a letter to the regulator's chairman on 4 June, issued in response to Writ Petition No. 2872 of 2026.

Ring Shine claims that despite receiving shareholder approval, it has not been allowed to utilise the remaining IPO proceeds, hampering its business expansion plans and putting several industrial land leases at risk over unpaid liabilities to the Bangladesh Export Processing Zones Authority (BEPZA).

In its letter, the company alleged that prolonged delays and restrictions imposed by the regulator have prevented it from using the funds, severely affecting both its ongoing operations and expansion plans.

Near-unanimous AGM approval

Shareholders approved a special resolution at the 27th Annual General Meeting on 18 December 2024, with 99.994% of votes cast in favour. The resolution extended the timeframe for utilising the IPO proceeds by another year and revised the utilisation plan for approximately $3.6 million in remaining funds, including accrued interest, according to company disclosure.

Ring Shine said it submitted all required documents to BSEC including price-sensitive information disclosures, AGM minutes, and e-voting reports but the regulator did not approve its application to use the funds for shareholder-approved purposes, including settlement of outstanding dues to BEPZA. Multiple subsequent applications also failed to produce any resolution, and the IPO fund account maintained with BRAC Bank remains frozen.

Why the company goes to court

Ring Shine said it approached the High Court only after exhausting all administrative avenues, with the board filing a writ petition under Article 102(2) of the Constitution on 11 May 2026.

Legal experts noted that the issuance of a Rule Nisi indicates the court considers the matter worthy of judicial review and has sought explanations from the concerned parties. The final verdict could set an important precedent on the balance between shareholder decisions and regulatory authority in the utilisation of IPO proceeds.

Company's position

Speaking to The Business Standard, Ring Shine Managing Director Aniruddha Pial said the company had complied with all BSEC rules, regulations, directives, and corporate governance requirements before obtaining shareholder approval for the revised utilisation plan.

He said approximately $3.3 million in unused IPO funds has remained idle for a prolonged period despite overwhelming shareholder approval, while long-standing dues to BEPZA, subject to an annual surcharge of 24%, continue to accumulate. BEPZA has also been cancelling industrial plot leases over unpaid obligations.

Pial claimed that nearly one-third of the company's leasehold land has already been cancelled and is subject to legal disputes, adding that repeated requests to BSEC to release the funds in line with the AGM-approved resolution were unsuccessful.

He alleged that nearly a year after the application was submitted, the commission rejected the proposal and declined to implement the AGM decision, with a subsequent review petition also failing to produce any effective response.

"On one hand, investors' money remains unused, while on the other, suspended and cancelled plots are threatening the company's operations. With no alternative left, we sought relief from the High Court," he said.

He added that while the court has given one month to resolve the issue, the funds have yet to be released, with 20 days still remaining under the court order.

Risk of losing BEPZA land

The company said its inability to use the IPO proceeds prevented it from clearing outstanding liabilities to BEPZA, which has already cancelled the leases of industrial plots numbered 231–236 and 157–163. Final cancellation notices have also been issued for plots 224–231, 237–260, and 79–84.

Located in the Dhaka Export Processing Zone, these plots are considered critical to Ring Shine's manufacturing operations. The company warned that losing them could amount to the loss of nearly one-third of its allocated land, posing an existential threat to the company and potentially disrupting production, causing job losses, and significantly harming shareholder investments.

Ring Shine Textiles raised funds through an IPO in 2019, with plans to use the proceeds for business expansion, machinery acquisition, debt repayment, and working capital. However, changing business realities, rising costs, and other operational challenges prevented the company from implementing the original utilisation plan, and efforts to revise the allocation of remaining funds subsequently led to disagreements with BSEC.

Market participants believe the case has once again highlighted concerns over the proper utilisation of IPO proceeds and the protection of investor interests, reigniting debate over how much flexibility listed companies should be granted in adapting IPO utilisation plans to evolving business conditions.

International oil prices have fallen sharply amid signs of easing tensions between the United States and Iran, but consumers in Bangladesh are unlikely to see immediate relief at the pump as the government continues prioritising the recovery of subsidy costs accumulated during recent market volatility.

The international benchmark Brent crude, which is used to price refined petroleum products, stood at around $72.48 per barrel on 27 February, just before the Iran conflict escalated. It surged during the conflict, reaching a peak of $112 per barrel on 18 May – an increase of 54.5% from pre-war levels.

Since then, prices have retreated sharply. Brent was trading at $83.19 per barrel yesterday (15 June), down 4.74% in a single session amid reports of progress in potential US-Iran negotiations. The benchmark has now fallen 25.7% from its May peak, though it remains 14.8% higher than pre-conflict levels.

Despite the correction in global markets, Energy Division officials say domestic fuel prices are unlikely to be reduced in the near term.

"Oil prices are falling in the international market but are still higher than the pre-war level, which continues to require substantial subsidy support for diesel," said Monir Hossain Chowdhury, Joint Secretary (Operations Wing) of the Energy Division. He added that diesel still requires a subsidy of about Tk50 per litre.

"We are monitoring the global fuel market closely. Future decisions on price adjustments will depend on market movements, as discussions on the Iran issue are still ongoing," he said.

Officials estimate that fuel subsidies in FY2025-26 could reach around Tk5,000 crore, largely to keep diesel prices below cost. Petrol, octane and other petroleum products are currently priced largely in line with international markets and do not require subsidy support.

Middle Eastern crude benchmarks see steeper decline

The decline has been steeper in Middle Eastern crude benchmarks used for Asian pricing.
Murban crude, produced in the United Arab Emirates, fell from $110.04 per barrel on 18 May to $77.31 yesterday, a 29.7% drop.

Arab Light crude, used by Bangladesh Petroleum Corporation for refining at Eastern Refinery, declined from $119.09 to $87.75 over the same period, down 26.3%.

Prices were raised as global oil surged

Domestic fuel prices were previously raised on 18 April, when global markets spiked amid fears of supply disruption following the US-Israeli attack on Iran. At that time, Brent crude closed at $91.87 per barrel – already 26.8% higher than the pre-war level.

Diesel was increased to Tk115 per litre from Tk100, octane to Tk140 from Tk120, petrol to Tk135 from Tk116, and kerosene to Tk130 from Tk112. A second adjustment on 31 May added Tk5 per litre to octane, petrol and kerosene, taking them to Tk145, Tk140 and Tk135 respectively.

Energy expert M Tamim said declines in global prices do not always translate into lower transport or commodity costs domestically. "Price reductions during downward cycles rarely reach consumers, as bus fares and freight charges do not adjust accordingly. That is why there is limited pressure to reduce fuel prices," he said.

He added that stronger monitoring in the transport sector would be needed to ensure that any future reductions in fuel prices benefit consumers.

The era of customs authorities arbitrarily determining the value of imported consignments instead of accepting buyers' declared and actual transaction values is set to end.

To this effect, the National Board of Revenue (NBR) has issued an order, under which internationally recognised websites and journals will be used as valuation benchmarks.

Experts believe the move will not only prevent the practice of imposing additional taxes through overvaluation but will also reduce opportunities for revenue evasion through false declarations. As a result, consumers may be spared an estimated additional Tk15,000 crore in costs annually.

According to the NBR order, if the value information provided in import documents submitted by importers is found to be consistent with information from internationally recognised and independent pricing publications, websites or journals such as S&P Global Platts, Independent Commodity Intelligence Services (ICIS), London Metal Exchange (LME), Shanghai Metals Market (SMM), Bloomberg, International Sugar Organization (ISO), or similar publications, the importer's declared value may be accepted as the correct transaction value for customs assessment purposes.

A senior NBR official involved in the budget process, speaking to The Business Standard on condition of anonymity, said, "The journals mentioned cover nearly 95% of imported goods."

The websites and publications in question regularly update commodity prices and are widely used around the world as benchmarks for determining transaction values.

Businesspeople say Bangladesh customs authorities often continue to assess goods based on reference prices established when global prices were high. Although prices frequently return to normal levels or decline after temporary increases, customs authorities continue to use the higher reference values, forcing importers to pay additional duties and taxes, which ultimately raise consumer prices.

At the same time, if an importer purchases goods at a price higher than the reference value, that higher value must now be declared, reducing opportunities for under-invoicing.

NBR Chairman Abdur Rahman Khan told The Business Standard, "The new decision will reduce opportunities for both under-invoicing and over-invoicing. Assessment based on transaction value will ensure the government receives the correct amount of revenue, while reducing the scope for complaints from businesses.

"A major issue under the current valuation system is the large number of litigations and appeals. These disputes and appeals will decline significantly."

The NBR chairman said, "This will provide substantial relief to businesses."

Business leaders and experts have described the initiative as "groundbreaking". They argue that assessments based on actual prices will reduce the likelihood of higher costs for consumers while also limiting opportunities for money laundering.

According to recent estimates, importers paid nearly Tk30,000 crore in additional duties over the past two years because customs authorities assessed imported consignments at values higher than their actual import prices. Experts believe consumers ultimately bore this additional cost.

They also argue that the practice is unscientific and inconsistent with the principles of the World Trade Organization (WTO).

For years, businesses have opposed customs assessments based on reference values, instead demanding that import duties be calculated using actual transaction values.

The BNP-led political government has now moved to fulfil that long-standing demand.

Salman Karim, managing director of Confidence Infrastructure Ltd, one of Bangladesh's leading business conglomerates, said, "The decision to assess import consignments based on transaction values will be transformative for us.

"It will create opportunities to reduce both our costs and the harassment we face."

Snehasish Barua, a chartered accountant and director of SMAC Advisory Services Limited, told TBS, "This decision will reduce costs and harassment for compliant businesses, while non-compliant operators will face greater scrutiny."

Calling it a "landmark initiative", he said, "Whenever we attend hearings, we see that most litigation revolves around valuation issues. These disputes will now decline significantly, and the government will receive the correct amount of revenue."

Current valuation system can increase taxes by 50%

The total tax incidence on polypropylene fibre (PP fibre) – the main raw material used to manufacture geobags – including duties and taxes, is approximately 28%.

A Confidence Group company manufactures geobags. Salman Karim told TBS that the average import price of PP fibre over the past two and a half years has been around $1,200 per tonne. However, customs authorities assessed imports using a reference value of $1,550 per tonne, roughly 30% higher than the actual price.

He said, "Although actual import prices have increased recently due to developments in the Middle East and other factors, they still remain below $1,350 per tonne. Yet importers have been paying duties based on the inflated valuation used over the past two and a half years.

"As a result, importers in this sector have been paying around Tk70 crore in additional import taxes every year."

He added, "This increased our costs and pushed up product prices."

Faridur Rahman, a small importer based in Mirpur who imports switches, sockets and other electrical and electronic products, told TBS, "The value used by the NBR for assessing switches and sockets is around 50% higher than the actual value, which significantly raises our costs."

"We have no choice but to pass these additional costs on to consumers because our profit margins are already very small," he said.

A new report titled "Tax Policy for Development: A Reform Agenda for Restructuring the Tax System," prepared by the National Task Force for Tax Reforms, found that overall import values in FY24 and FY25 were increased by up to 15% compared with importers' declared transaction values.

While the report does not quantify the additional revenue collected through loading, importers estimate they paid up to Tk15,000 crore extra annually, or roughly Tk30,000 crore over two years. According to NBR data, more than Tk2 lakh crore in import taxes was collected during those two fiscal years.

Accessing the data will cost money

NBR sources said access to the international databases mentioned in the order will require paid subscriptions, with total annual costs estimated at around Tk2 crore.

The NBR chairman said the subscription process for these platforms has already begun.

However, another source said discussions on obtaining subscriptions have been ongoing for the past year with little progress, largely due to bureaucratic delays.

The NBR official said, "Importers themselves may subscribe to these databases and provide the data to the NBR, and the NBR will accept it."

However, the cost could be prohibitively high for small importers.

The official suggested another option: "Instead of individual businesses subscribing separately, their trade associations could obtain subscriptions and share access among members."

"What we need is access to the data. If importers can obtain access themselves and share it with us while our own process is delayed, we will accept it," he said.