Merging weak banks with other lenders alone will not resolve the ongoing crisis in the banking sector, said Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank.

The full extent of this sector's financial distress has yet to emerge, as non-performing loans, capital shortages, provisioning requirements, liquidity pressures and governance weaknesses need to be addressed simultaneously, he said.

"Giving fresh capital or merging a bank does not automatically make a weak bank sustainable," he said at a discussion, "Financial Condition of the Banking Sector", jointly organised by the Capital Market Journalists Forum and CFA Society Bangladesh in Dhaka today (19 September).

Mahbubur, former chairman of the Association of Bankers, Bangladesh (ABB), said the volume of non-performing loans in the banking sector was around Tk28,000 crore in 2008 but has now exceeded Tk600,000 crore, accounting for more than 32% of total loans.

Many rescheduled loans could also become classified again in the future, he warned.

According to a CFA Society Bangladesh analysis based on Bangladesh Bank data, the banking sector's NPL ratio stood at 32.8% in June 2026. As of December 2025, the top five banks accounted for 51.87% of total NPLs, while the top 10 accounted for 73.63%.

Mahbubur said implementing International Financial Reporting Standard (IFRS) 9 could provide a clearer picture of banks' credit risks and provisioning requirements, potentially putting additional pressure on the capital positions of some banks.

"There is no such thing as giving Tk50,000 crore today and fixing a bank tomorrow," he said.

On the government's initiative to merge five weak banks, he said a merger between a strong bank and a weak or specialised bank could create operational synergies, but merging one weak bank with another weak bank may not deliver the expected benefits.

After a merger, overlapping branches, employees and management structures need to be reduced to lower operating costs and improve efficiency, he said, adding that simply changing ownership or the name of a bank while retaining the existing structure would not deliver the real benefits of consolidation.

The CFA Society analysis showed that deposits grew 10.74% in June 2026, while private-sector credit increased only 4.47%. Meanwhile, banks' investments increased 30.3%. In 2025, investment in government securities reached 14.1% of total banking-sector assets.

Mahbubur said the rise in investment in government securities while loans and advances were declining at many banks could generate income in the short term, but could not replace banks' core business.

"The core business of a bank is to lend and take deposits. Therefore, a decline in net interest income is a bad sign for banks and the banking industry as a whole," he said.

The sector's net operating profit increased 116% to Tk32,108 crore in 2025, but provisioning against bad loans rose to Tk249,600 crore.

The sector's overall capital adequacy ratio also fell to negative 2.64% at the end of 2025, against the regulatory minimum of 10%. However, 42 banks met the requirement, representing 60.51% of total sector assets.

Mahbubur said banks need to increase low-cost deposits, particularly CASA, and use technology to reduce operating costs. Rather than indiscriminate layoffs, banks should improve productivity through technology and efficiency.

He said stronger governance, accurate assessment of banks' financial condition, adequate provisioning and compliance with international accounting standards are essential for restoring stability.

"To make the banking sector sustainable, we need more than mergers. We need targeted restructuring where necessary and structural reforms across the sector," he said.

The US and China are discussing a plan to reduce or eliminate China's tariffs on American LNG as part of a broader package of energy and agriculture agreements that could be announced when Chinese President Xi Jinping visits Washington next week, according to two people briefed on the discussions.

The potential relief on US exports of liquefied natural gas is being discussed alongside a broader framework under which the US and China would each cut tariffs on about $30 billion of goods, the people said.

China imposed a 15 percent tariff on US LNG in February 2025 in retaliation for President Donald Trump's duties on Chinese goods. That effectively halted the US-China LNG trade, with the last significant cargoes arriving early that year.

American LNG producers are seeking new markets to absorb a wave of new export capacity being built along the US Gulf Coast, with years of trade tensions with China having made one of the world's biggest LNG markets less accessible.

The discussions are part of efforts to stabilize trade ties ahead of a September 24 meeting between Trump and Xi and are not final, the people said. Neither the White House nor the Chinese embassy in Washington responded to requests for comment.

The American LNG industry is entering a major expansion phase, with export capacity set to grow by roughly 10 billion cubic feet per day through 2027 as new and expanded facilities ramp up, with projects involving Cheniere Energy, Venture Global, Sempra, NextDecade and Exxon Mobil among those adding capacity.

The return of Chinese buyers would give US producers another major destination for their gas just as geopolitical upheaval is reshaping global energy flows, potentially helping underpin demand for projects now under construction and those seeking financing and long-term customers.

Of the almost 100 million metric tons of LNG capacity under construction in the US, 24.5 million metric tons have not yet been contracted to long-term customers, according to industry estimates and Reuters analysis.

GLOBAL LNG FLOWS

After Russia's 2022 invasion of Ukraine disrupted Europe's access to Russian pipeline gas, US LNG cargoes that might otherwise have gone to Asia were increasingly drawn to Europe.

The ongoing conflict in the Middle East between the US and Iran, meanwhile, has created another shift in global energy flows, with disruptions to supplies increasing competition for LNG cargoes in Asia.

China is the world's largest LNG importer and the US is the world's largest LNG exporter, giving the two countries an economic incentive to restore a trade relationship that was rapidly expanding before the tariff dispute.

US LNG exports to China fell from 64 vessels in 2024 to effectively zero in 2025 after Beijing imposed the tariff, according to US government data.

In 2021, the number had reached a record 131 vessels, reflecting the rapid growth of the US LNG trade with China after large-scale exports from the Lower 48 states began in 2016.

US LNG shipments to China fell to just two vessels in 2019 during Trump's first-term trade dispute with Beijing, before rebounding sharply in 2020 and 2021.

In recent months, several US cargoes that left Gulf Coast export terminals have arrived in China or are headed there, according to LSEG shipping data, suggesting Chinese buyers had started to return to the US market even as the tariff remained in place.

US LNG exports averaged 17.4 bcf/d in the first half of 2026, up 23 percent from a year earlier, according to the Energy Information Administration.

US factory production unexpectedly fell in August and higher oil prices and rising interest rates could offset some of the support from an artificial intelligence buildout, likely keeping activity moderate for the rest of the year.

The decline in output, reported by the Federal Reserve on Friday, followed seven straight months of increases. The US central bank on Wednesday raised interest rates for the first time in three years and flagged further increases in borrowing costs in the months ahead. Oil prices are hovering above $100 a barrel with no end in sight to the US-Israeli war with Iran.

"Looking ahead, we think manufacturing output will rise a little further over coming months, but will fail to match the pace set in the first half of this year," said Samuel Tombs, chief US economist at Pantheon Macroeconomics.

"Some manufacturers likely will find that demand softens as they pass on higher energy prices to consumers."

Manufacturing output dropped 0.3 percent last month following an unrevised 0.2 percent rise in July. Economists polled by Reuters had forecast production would increase 0.3 percent. Output advanced 0.9 percent on a year-over-year basis in August, a modest increase that, according to some economists, indicated the Trump administration's aggressive trade policy had not had the desired effect of rejuvenating the nation's industrial base.

Production in the sector, which accounts for about 9.4 percent of the economy, received a boost in prior months as businesses rushed orders to avoid shortages and higher prices from the escalation of the war in the Middle East.

The decline in August was led by a 0.5 percent drop in the production of long-lasting manufactured goods. Motor vehicles and parts production decreased 1.2 percent, notching a second straight monthly decline. Output of computers and peripheral equipment fell 1.4 percent, but was up 5.5 percent on a year-over-year basis.

Production of communications equipment increased 0.8 percent. Though the output of semiconductors and related electronic components dipped 0.1 percent, this category was up 12.4 percent from a year ago.

The AI spending spree has cushioned the blow from import tariffs on manufacturing. Some economists are still betting on a strong manufacturing performance this year, despite a sharp rise in longer-dated US Treasury yields in recent weeks and the Fed's decision to raise its benchmark overnight interest rate by 25 basis points to the 3.75 percent-4.00 percent range.

POSSIBLE TAILWIND FROM HIGHER DEFENSE SPENDING

"We still look for manufacturing activity to pick up through next year, and the AI infrastructure buildout is a key reason for our sanguine outlook," said Bernard Yaros, lead U.S. economist at Oxford Economics. "The demand case for AI still seems strong enough to shrug off higher-for-longer rates and increased geopolitical risk. Greater defense spending will also act as another tailwind."

Restocking by businesses that have run down inventories for five straight quarters to meet robust demand could also provide a lift to manufacturing, though some economists argued that trend could be overshadowed by the drag from rising costs.

Production of nondurable goods was unchanged after falling 0.4 percent in July. Rises in output at textile mills as well as for apparel and leather products were offset by declines in the production of plastics and rubber goods, and petroleum and coal.

"Factory output shows the first signs of a slowdown which could worsen if the geopolitical headwinds intensify and diesel fuel prices do not come back down," said Christopher Rupkey, chief economist at FWDBONDS. "Soaring energy prices are costly for industry and higher diesel prices may start to chip away at the manufacturing renaissance picture painted by White House economic officials."

Mining production edged up 0.1 percent last month, matching the rise in July. Oil and gas well drilling increased 0.9 percent after accelerating by 5.2 percent in July.

Utilities production shot up 1.8 percent after climbing 0.5 percent in July. Overall industrial production was unchanged last month after gaining 0.2 percent in July. Industrial output advanced 1.4 percent on a year-over-year basis in August.

Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, was unchanged at 76.3 percent in August. It is 3.1 percentage points below its 1972–2025 average.

The operating rate for the manufacturing sector fell 0.3 percentage points to 75.7 percent. It is 2.5 percentage points below its long-run average.

"There is no evidence here that tariffs or anything are generating an influx of new jobs in manufacturing and industry," said Carl Weinberg, chief economist at High Frequency Economics.

Nearly Tk 33 out of every Tk 100 in loans disbursed by the country’s banking sector are now classified as non-performing, meaning that 33 per cent of loans are in default. By the end of June, non-performing loans (NPLs) had risen to more than Tk 600,000 crore (Tk 6 trillion). Even amid such a crisis, 13 private banks stand out as exceptions, with each reporting an NPL ratio of below 5 per cent.

Senior officials of these banks say that disciplined and independent loan approval processes, careful assessment of borrowers’ repayment capacity, and a focus not only on large corporate loans but also on small and medium-sized enterprises (SMEs) and consumer lending have helped keep NPLs under control.

According to the central bank’s latest data as of June, all 13 banks with NPL ratios below 5 per cent are from the private sector. The group includes both newer-generation banks and first-generation banks. The banks are Community Bank, BRAC Bank, Pubali Bank, Citizens Bank, Prime Bank, City Bank, Eastern Bank, Jamuna Bank, Bengal Commercial Bank, NCC Bank, Uttara Bank, Shahjalal Islami Bank, and Shimanto Bank.

According to the International Monetary Fund’s (IMF) Financial Soundness Indicators and the World Bank’s non-performing loan indicators, Bangladesh currently has the highest level of NPLs in the world. Banking-sector stakeholders say that despite Bangladesh having one of the highest levels of loan defaults globally, some banks in the sector continue to maintain good corporate-governance practices. As a result, these banks have strengthened their financial foundations and have also performed better in terms of profitability.

Banks that are ahead on various financial indicators are also seeing their deposits grow at higher rates than those of other banks. At the same time, these banks have relatively lower levels of non-performing loans.

13 banks with low non-performing loans

According to Bangladesh Bank data, Community Bank has the lowest rate of non-performing loans (NPLs) in terms of percentage. The total amount of loans disbursed by this new-generation bank is also relatively low. As of the end of last June, out of the bank's total disbursed loans of Tk 1,633 crore (Tk 16.33 billion), Tk 5 crore (Tk 50 million) was non-performing. This puts the bank's NPL ratio at 0.33 per cent.

BRAC Bank holds the second position, with an NPL ratio of 2.05 per cent. As of last June, the bank's total disbursed loans stood at Tk 75,621 crore (Tk. 756.21 billion) of which Tk 1,548 crore (Tk 15.48 billion) was classified as non-performing. BRAC Bank is currently the top profit-earning institution among locally-owned banks. Recently, BRAC Bank was featured in US magazine Forbes’ list of the world''s top 500 best-performing banks.

When asked, Tareq Refat Ullah Khan, Managing Director (MD) of BRAC Bank, said: "In credit risk management and loan approval, good governance and proper risk assessment are the main tasks. This is the key to maintaining the quality of BRAC Bank's loans. Loans have been extended by assessing borrowers'' repayment capacity in a completely neutral manner without any unethical pressure. As a result, we have been able to keep non-performing loans under control."

Pubali Bank ranks third on the list of banks with the lowest level of non-performing loans (NPLs) in the country. At the end of last June, the bank’s NPL ratio stood at 2.46 per cent. By then, out of the bank’s total outstanding loans of Tk 72,576 crore (Tk 725.76 billion), Tk 1,789 crore (17.89 billion) was classified as non-performing.

Speaking to Prothom Alo, Pubali Bank Managing Director Mohammad Ali said, “No loan at this bank has been granted based on the sole advice or personal recommendation of me or any senior official. Loans are approved through a fully institutional and systematic assessment process. The borrower’s personal or political identity is also not taken into consideration when granting loans.”

Mohammad Ali further said, “Most of the bank’s large loans have been provided to essential business sectors such as food and food products, education, healthcare, housing, and garments. As a result, a relatively small proportion of our loans have become non-performing. We are now increasing our focus on consumer lending.”

Citizens Bank, a new-generation bank that ranks fourth on the list, had an NPL ratio of 2.65 per cent at the end of last June.

Prime Bank ranks fifth. At the end of last June, the bank’s NPLs amounted to Tk 948 crore (Tk9.48 billion), equivalent to 2.74 per cent of its total loans.
Prime Bank is followed by City Bank in sixth place. At the end of last June, City Bank’s non-performing loans (NPLs) amounted to Tk 1,514 crore (Tk 115.14 billion), equivalent to 2.79 per cent of the bank’s total outstanding loans.

Speaking to Prothom Alo, City Bank Managing Director Masrur Arefin said, “City Bank’s independent loan approval process and diversified lending portfolio have enabled us to keep the NPL ratio under control. SME and consumer lending are providing us with significant comfort. Banks that are placing greater emphasis on SME and consumer lending are performing well.”

Eastern Bank ranks seventh in terms of the lowest NPL ratio. At the end of last June, the bank’s NPLs stood at Tk 1,520 crore (Tk 15.20 billion), representing 3.28 per cent of its total outstanding loans.

From eighth to 13th place are, respectively, Jamuna Bank, Bengal Commercial Bank, NCC Bank, Uttara Bank, Shahjalal Islami Bank, and Shimanto Bank. Among them, the NPL ratio was 3.35 per cent at Jamuna Bank, 4.07 percent at Bengal Commercial Bank, 4.19 per cent at NCC Bank, 4.36 per cent at Uttara Bank, 4.82 per cent at Shahjalal Islami Bank, and 4.88 per cent at Shimanto Bank.
72pc of non-performing loans concentrated in 10 banks

According to Bangladesh Bank data, the total amount of non-performing loans (NPLs) in the country’s banking sector stood at Tk 606,555 crore last June. This represented 32.78 per cent of the banks’ total outstanding loans. Of this amount, Tk 439,526 crore in NPLs was concentrated in 10 banks, accounting for 72 per cent of the total non-performing loans.

Islami Bank, a private-sector bank, had the highest amount of NPLs. The bank had NPLs of Tk 98,914 crore, (Tk 989.14 billion) equivalent to 52.15 per cent of its total loans. Janata Bank, a state-owned bank, had the second-highest amount of NPLs, at Tk 75,728 crore (Tk 757.28), representing 75.05 per cent of its total outstanding loans.

The merged banks have the highest NPL ratios. Among them, 97.08 per cent of First Security Islami Bank’s loans, 96.78 per cent of union Bank’s loans, 78.15 per cent of Social Islami Bank’s loans, and 70.81 per cent of EXIM Bank’s loans are currently classified as non-performing.

At National Bank, 65.74 percent of loans are classified as non-performing, compared with 63.38 per cent at IFIC Bank and 56.4 percent at AB Bank. In addition, 43.98 per cent of the loans at state-owned Agrani Bank are now classified as non-performing.

Anis A Khan, former chairman of the Association of Bankers, Bangladesh (ABB) and former managing director of Mutual Trust Bank (MTB), spoke to Prothom Alo about the overall situation regarding non-performing loans in the country’s banking sector. In his view, “Despite the high level of NPLs in the banking sector, the banks that are performing well continue to follow good corporate-governance practices. Even a look at the composition of the boards of directors of these banks shows what they are like.

"Customers now take such factors into consideration when deciding where to deposit their money. At the same time, these banks have skilled bankers working with them. This is why their levels of non-performing loans are lower.”

The National Board of Revenue (NBR) has moved to subscribe to internationally -recognised commodity databases to reduce long-standing disputes between importers and customs officials over the valuation of imported goods.

The customs authority is considering subscriptions to databases such as S&P Global Platts, the London Metal Exchange (LME), Shanghai Metals Market (SMM) and Independent Commodity Intelligence Services (ICIS).

At a recent meeting at Chattogram Customs House, chaired by Finance Minister Amir Khosru Mahmud Chowdhury, the authorities decided to subscribe to at least one international database by this month, according to the meeting minutes obtained by the Financial Express.

A committee of the NBR's customs wing was formed to assess the pros and cons of subscribing to such databases. The committee has recommended subscribing to the S&P Global Platts in the first phase.

S&P Global Platts is a leading independent provider of information and benchmark prices for commodity and energy markets. Since 1909, Platts has provided information and insights to help clients make sound trading and business decisions and enable markets to operate with transparency and efficiency.

Trade economist Dr Zaidi Sattar, chairman of the Policy Research Institute (PRI), said arbitrary valuation should be stopped immediately by incorporating artificial intelligence into the ASYCUDA World system.

Subscription to global databases would also help minimise the hassles faced by importers, he said.

The databases could be linked to the existing ASYCUDA system, developed under the United Nations Conference on Trade and Development (UNCTAD), to improve automated valuation, Dr Sattar added.

He said Bangladesh is currently utilising only around 25 per cent of the system's capacity.

The complex tariff regime has been allowed to continue, creating scope for underhand dealings at the import stage, Dr Sattar said, stressing the need for greater automation.

Officials said customs would accept the valuation data submitted by importers until the database system becomes fully operational. The decision was also taken at the meeting chaired by the finance minister.

Currently, the NBR does not subscribe to international databases that can be used to cross-check the declared values of imported goods.

Md Fazlul Huq, administrator of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said subscribing to one or two databases would not be sufficient unless the NBR also ensures access to databases covering major import markets.

Products bought from different markets can have different prices and varying quality, he argued.

Citing a recent import for a new production unit, Fazlul Huq said 100 per cent polyester fabric was imported at $2.35 per unit, while customs assessed its value at $4.0.

The same product, however, may be priced at $4.0 in some countries, he said, adding that country-specific sources and databases should therefore also be included to reduce disputes over valuation.

Importers have long complained that customs officials often question the values declared in invoices and other documents and impose higher assessed or preset values for calculating duties and taxes.

Despite several assurances and directives from senior NBR officials, importers say the practice of disputed or arbitrary valuation persists at customs houses.

Chittagong Chamber of Commerce and Industry (CCCI) President Amirul Huq told the meeting that customs officials often assess imported goods at values higher than their purchase or invoice prices.

"For plastic chips imports, the actual purchase value and invoice value was $8,000-9,000 per tonne, but customs assess it at $12,000 to fix payable duties and taxes," he said, sharing his experience.

At the meeting, Chattogram Customs Commissioner Md Mahbubur Rahman said importers who submit purchase data from global platforms along with their invoice values are considered to have provided correct information.

For some imported goods, however, customs needs to verify the values against international databases, but it currently does not subscribe to those platforms, he said.

Implementation of international best practice of accounting, IFRS 9, in the banking sector would be challenging amid the huge non-performing loans and the sector’s current state, according to investment experts.

Although countries like Pakistan, Nepal and Sri Lanka have already implemented IFRS 9 — a move from provisioning based on incurred losses to forward-looking expected credit losses before default — it is difficult for Bangladesh as many banks are already struggling, according to the CFA Society Bangladesh.

The association of chartered financial analysts (CFAs) presented the findings at an event on financial analysis of the banking sector organised by the CFA Society Bangladesh and the Capital Market Journalists’ Forum (CMJF) today at the CMJF auditorium in the capital.

Syed Mahbubur Rahman, a former chairman of the Association of Bankers, Bangladesh (ABB), said it is essential to assess the actual risk of bank loans and maintain adequate provisions in line with international standards.

However, implementing IFRS 9 could pose “a major challenge” for banks under pressure from high non-performing loans and capital shortages.

Therefore, while adhering to international standards, IFRS 9 should be implemented gradually, taking into account the current realities of the country’s banking sector, he said while speaking at the event as the chief guest.

Bangladesh is going to follow IFRS 9 in banking accounts partly on a pilot basis in the current year. Full application for credit will be implemented from 2028.

Referring to the fact that non-performing loans in the banking sector have exceeded 32 percent, Rahman, also managing director and CEO of Mutual Trust Bank, said such a high level of bad loans is putting pressure on banks’ earnings, provisioning and capital.

To restore the capacity of banks, liquidity, capital, lending and non-performing loans must all be considered together. Banks need to be made effective not merely as deposit-taking institutions but as the primary channel for financing productive sectors of the economy.

He said reforms in the banking sector should be undertaken gradually, taking into account the realities on the ground. A sudden major change could put pressure not only on banks but also on depositors and businesses.

Minhaz Zia, chairman of North Star Investments, proposed that at least 50 percent of the boards of commercial banks should comprise independent directors to improve the banking sector. He also said that no member of a bank’s board of directors should be allowed to sit on its credit committee.

Loan approvals should be handled by a completely independent credit team, while an internal control committee comprising only independent directors should oversee internal controls.

He also stressed the need to modernise the bankruptcy law, or Bankruptcy Act.

At the event, Mahtab Osmani, president of the CFA Society, and Md Munir Hossain, president of the CMJF, also spoke.

Md Iqbal Hossain, chief financial officer of Sonali Bank PLC; Sakib Chowdhury, head of research at UCB Stock Brokerage, and S M Galibur Rahman, head of research at Shanta Securities, gave presentations.

In the presentations, they said banks in Bangladesh will need at least Tk 2,000 crore in paid-up capital to be eligible to pay cash dividends, although this is an uncommon practice in any neighbouring country.

A comparison with other South Asian and Asian banking systems also shows that many jurisdictions principally use risk-based capital, asset quality, distributable earnings and regulatory compliance when determining whether banks can distribute dividends.

The analysis illustrates the distinction by comparing BRAC Bank and National Bank. As of June 30, 2026, National Bank had about 41 percent more paid-up capital than BRAC Bank. Yet National Bank’s shareholders’ equity, excluding non-controlling interests, was negative Tk 46.7 billion, while BRAC Bank’s stood at positive Tk 113.1 billion.

Around 5,000 workers at Chattogram Port's General Cargo Berth (GCB) are facing sharp income losses as container traffic allocated to six private berth operators has remained about 40% below indicative tender volumes, the operators said.

They have sought an urgent review of cargo allocation, saying the prolonged decline in workload has left many workers idle while operators continue to bear fixed costs for wages, equipment and maintenance.

The six operators are FQ Khan and Brothers at Jetty 6, Fazlisons at Jetty 9, Bashir Ahmed and Company at Jetty 10, A & J Traders at Jetty 11, Everest Port Services at Jetty 12 and MH Chowdhury at Jetty 13.

In separate letters to the Chittagong Port Authority (CPA) on 14 September, the operators said actual container allocation remained substantially below the indicative volumes used to assess their five-year contracts, making operations financially difficult to sustain.

"Only 800 workers are permanent in GCB berths. More than 5,000 workers are productivity-based. Here, no vessel means no work and no pay," Taslim Uddin Selim, general secretary of Chattogram Dock Jatiyatabadi Sramik Dal, told The Business Standard.

"As a result, most of the workers remain idle when there is no vessel to handle at the berths. It becomes very difficult for them to earn bread and butter for their families when the number of vessels falls," he said.

Fazle Ekram Chowdhury, managing director of Fazlisons and president of the Bangladesh Berth Operator Association, said the decline in vessel allocation had directly affected workers whose earnings depend on port operations.

"Almost half of the people remain idle when the number of ships falls. Their income has fallen completely," he told TBS.

He said operators continued to retain some workers and pay minimum wages even when there was insufficient work.
Infographics: TBS
Infographics: TBS

Tk25,000 welfare payment

Fazle Ekram questioned whether the Tk25,000 welfare payment provided to registered port workers could compensate for income losses caused by reduced workload.

He said workers could have earned that amount in a month or two if vessel handling had remained at normal levels, while the welfare payment is made only once a year.

"If a worker's duty had increased, they could have earned Tk25,000 more in a month or two months. Giving Tk25,000 once a year cannot compensate for that loss," he said.

He also warned that continued pressure on workers could lead to dissatisfaction.

"If the port authority thinks Tk25,000 can suppress workers' dissatisfaction, that would be a wrong expectation. If the situation explodes, it will not remain within my control," he said.

40% gap in cargo allocation

The operators said their financial commitments were based on the indicative container volumes included in the tender documents.

Fazlisons said it handled 437,596 boxes between October 2022 and August 2026 against an indicative benchmark of 721,356 boxes for the same period, leaving a shortfall of 283,760 boxes.

The operator handled 60.7% of the indicative volume and estimated that the shortfall had left around Tk8.61 crore in fixed operational costs unrecovered.

Fazlisons was awarded the contract in September 2022 after quoting Tk76.91 crore. The agreement for operating Lot 2, Berth 9 at GCB was signed on 25 September that year.

The tender estimated a five-year volume of 920,875 boxes, or around 15,348 boxes a month, according to the company.

Fazlisons said it did not consider the tender volume a guaranteed minimum, but argued that the projection was a key basis for determining manpower, equipment, investment and pricing when it submitted its bid.

The company currently incurs around Tk46.36 lakh in fixed monthly expenses for manpower, equipment, maintenance, insurance and other operational costs, it said.

NCT, CCT handle more containers

The operators have also questioned the distribution of container vessels among GCB, New Mooring Container Terminal (NCT) and Chattogram Container Terminal (CCT).

They cited July 2026 data showing NCT handled 126,722 boxes and CCT 46,029, while Fazlisons handled 7,963 boxes at its GCB berth.

Fazlisons acknowledged that the contractual scopes of the three terminals are different, but said the disparity warrants a transparent review of vessel and cargo allocation.

The company referred to a CPA board decision of 28 March 2023 that called for reasonable allocation of vessels among CCT, NCT and GCB if the number of container vessels calling at Chattogram Port was insufficient.

The operators said their association had repeatedly raised the issue with the CPA through representations submitted in February 2023, February and December 2024, December 2025 and January 2026.

Operators seek review, not rate hike

The operators said they would prefer increased vessel and cargo allocation over a higher handling rate.

"If sufficient container vessels can reasonably and safely be allocated to GCB, we would much prefer to earn our revenue by performing the work rather than seeking any financial adjustment," Fazle Ekram said.

He claimed turnaround times at NCT, CCT and GCB were broadly comparable and alleged that GCB had not received what operators consider a reasonable share of container traffic.

The operators have asked the CPA to provide or jointly review vessel-wise and operator-wise allocation data and sought a contractual review under the General Conditions of Contract and relevant provisions of the Public Procurement Act and Rules.

They said they were not seeking automatic compensation or a rate increase because of lower traffic, instead proposing measures including contractual variation, adjustment of operational obligations, or rationalisation of fixed manpower and equipment requirements if the CPA cannot ensure a reasonable workload.

Fazlisons proposed a review involving the CPA's traffic, terminal, procurement, finance and legal departments and said it was ready to submit records of operational costs, manpower, equipment, insurance and bank liabilities.

Fazle Ekram also said local operators had proposed an investment plan worth around Tk700 crore to improve GCB facilities but had received no response from the CPA or the Ministry of Shipping.

He alleged that foreign companies were receiving faster responses from the authorities while local investors were being ignored.

The operators have urged the CPA to take an early decision, saying the continued decline in workload is putting their businesses and thousands of workers' livelihoods under pressure.

No response from CPA

The Business Standard contacted CPA Director (Traffic) Golam Md Sarwarul Islam by phone for comments, but he did not answer.

The CPA secretary was later contacted and sent specific questions on the issues raised by the berth operators. Although he assured TBS that he would respond, he neither provided answers nor returned the call.

The government is considering issuing licences for digital banks soon, as digital banking is expected to become part of Bangladesh's digital economy and financial inclusion agenda, Finance Minister Amir Khosru Mahmud Chowdhury said today (19 September).

"Digital banking is going to happen very soon. I have no doubt about it because this is very much part of our digital economy and financial inclusion," he said while speaking at a dialogue titled "Financial Inclusion: Policy Goals, Transactions Ecology and Sustainable Roadmap", organised by the Power and Participation Research Centre (PPRC) at a hotel in the capital.

The minister said digital banking should be rolled out gradually, with particular attention to cybersecurity, digital infrastructure and the integration of credit information.

He also said digital banking should not be treated as a standalone service but as part of a wider financial ecosystem covering reliable internet connectivity, digital payments, financial services and access to formal banking.

He further said strong digital infrastructure was needed before expanding digital financial services.

Digital banking could widen access

Amir Khosru said the new system could bring people currently outside the formal financial system into banking, particularly low-income households, farmers and other underserved groups.

He cited government-backed payment programmes as an example, saying regular digital transactions could encourage people without bank accounts to enter the formal financial system.

Many Family Card beneficiaries, particularly housewives, do not have bank accounts, he said. Regular payments through formal channels could encourage them to open accounts.

A similar process was taking place among farmers receiving payments through the Farmer Card, he added.

"Once people receive payments through a formal system, they have an incentive to enter the banking system," he said.

Stakeholders flag Bangla QR misuse

Participants at the dialogue raised concerns over the removal of the minimum merchant discount rate (MDR) and interchange reimbursement fee (IRF), saying the move had disrupted the business model of mobile financial service (MFS) providers.

They called for stronger regulatory monitoring of Bangla QR, alleging that some agents were diverting MFS funds into bank accounts to take advantage of the zero-fee payment facility.

MDR is a fee paid by merchants to banks and payment service providers for processing digital transactions.

IRF is an interbank service charge paid by the institution providing Bangla QR to the institution whose app is used to complete a payment.

Industry experts warned that if MDR and IRF remain at zero, MFS providers may eventually seek to recover their costs through other charges, including cash-in fees, which could undermine financial inclusion.

'Bangla QR must be embraced, but abuse prevented'

Former Bangladesh Bank governor Ahsan H Mansur said Bangla QR was an important initiative but required safeguards to prevent misuse.

"Bangla QR is something we have to embrace, but at the same time we have to prevent its abuse," he said.

He said addressing the challenges would require several measures rather than a single solution.

"There's no single solution to this issue. It has to be addressed piece by piece," he said.

Mansur said that during his tenure, local governments had been instructed to require businesses seeking new or renewed trade licences to have a Bangla QR facility.

He also highlighted the importance of maintaining a single national QR standard accessible to all institutions and customers.

However, he said this raised the question of whether customers should be required to have smartphones to use the system.

Mansur also said the digital bank initiative had stalled.

"Everything was done during my time. The list was prepared, the criteria were identified, and the process was laid out. But since then, it has never moved forward," he added.

PPRC seeks sustainable roadmap

PPRC Executive Chairman Hossain Zillur Rahman said Bangladesh needed a sustainable roadmap for implementing Bangla QR, incorporating the views of all relevant stakeholders.

He said building a functional digital financial ecosystem required coordinated action across multiple areas and that stakeholders were prepared to contribute to the process.

"The system has to match through a sustainable roadmap approach. It requires a much, much bigger discussion," he added.

Bangladesh Bank (BB) has fixed the maximum interest rate at 7.0 per cent for loans under the Tk200 billion pre-refinance scheme aimed at reopening closed industrial and service sector enterprises.

The central bank also introduced a six-month grace period on loan disbursements, during which no interest can be collected from borrowers.

The directive was issued through a circular on Thursday, reports UNB.

It specifies that the recovery of interest, including the accrued interest from the first two quarters, will commence only after the six-month grace period ends.

This circular follows two previous directives issued on June 4 and July 7, which established the "Closed Industrial and Service Sector Support Pre-Refinance Scheme" and laid down its policy framework.

Under the updated guidelines, the term "Large Industry" used in prior circulars has been replaced simply with "Industry." This adjustment widens the scope of financing under the scheme beyond large industries to include other eligible industrial enterprises.

According to Bangladesh Bank's instructions, participating commercial banks will receive pre-refinance facility from the central bank at an interest rate of 4 percent.

However, banks will not have to pay any interest during the initial six-month grace period.

Following the grace period, banks must settle interest payments to Bangladesh Bank on a quarterly basis, including the accumulated interest from the first two quarters.

Similarly, at the end-user level, the maximum interest rate charged by banks to borrowers cannot exceed 7.0 per cent. Borrowers will enjoy a complete exemption from interest payments during the six-month grace period, after which banks will collect regular interest along with the accrued balance from the initial two quarters.

Application Flexibility:

The central bank has eliminated rigid application deadlines for the scheme. Eligible enterprises can apply for pre-refinance facilities at any point during the scheme's three-year tenure, subject to fund availability.

This ensures that enterprises unable to apply at the onset of the scheme retain the opportunity to seek funding later if liquidity remains available.

Bangladesh Bank highlighted that the primary objective of the BDT 20,000 crore fund is to restore production and operational activities in long-closed industrial and service sector units.

Government employees will receive arrears under the new pay scale for the period between July 1 and the date of the issuance of the official order, according to a finance ministry gazette notification.

The Ministry of Finance issued the circular on September 17, implementing the National Pay Scale 2026 retrospectively from July 1.

This follows the government’s approval on August 31 of the largest pay hike for the civil service since independence, which doubled the basic salary of top officials and raised the lowest pay by a record 142 percent.

According to the order, the basic salary adjustments under the new pay scale will unfold in phases.

For employees in Grades 10 to 20, 50 percent of the total basic salary increase -- the difference between the 2026 scale and their existing basic pay -- will be added to their basic salary drawn on June 30, 2026, for the period from July 1 to December 31.

They will receive 75 percent of the increase from January 1, 2027, to June 30, 2027, and 100 percent of the new pay scale alongside annual increments from July 1, 2027.

For officials in Grades 1 to 9, 40 percent of the total basic salary increase will be disbursed from July 1 to December 31, 2026. This will rise to 70 percent from January 1, 2027, with the full 100 percent salary adjustment coming into effect from July 1, 2027.

All other allowances will continue to be paid at the existing rates drawn as of June 30, 2026, until December 31, 2027. The revised allowance rates specified in the new order will take effect on January 1, 2028.

Prior to this update, the last national pay scale was introduced in 2015, marking the highest hike until now, with basic pay rising by 95 percent in the top grade and 101 percent in the lowest.

Annual demand for animal feed is expected to rise to 10 million tonnes by 2030 from 7.5 million tonnes now, driven by growing domestic demand for poultry and meat, according to a study by Bangladesh Agricultural University (BAU).

Of the projected demand, 65 percent will be used for poultry, 20 percent for fish farming and 15 percent for cattle, the study said.

It was released yesterday at a seminar titled “Feed Growth Supporting Bangladesh’s Protein Demand”, jointly organised by the Feed Industries Association of Bangladesh (FIAB) and the US Soybean Export Council (USSEC) at Dhaka Regency Hotel & Resort in the capital.

Bangladesh’s fish and poultry feed industry supplies nutrient-rich feed to support animal growth and productivity. It uses ingredients such as rice bran, maize, soybean meal, fish meal and other locally available materials.

However, if the national goal is protein security, the industry should be assessed based on how efficiently it produces edible protein, said Md Safiqur Rahaman Shishir, head and associate professor of the Department of Animal Nutrition at BAU.

“The cheapest feed does not necessarily result in the lowest cost of producing animal protein,” he said while presenting a paper on improving feed efficiency at the seminar.

Khabibur Rahman, Bangladesh market lead of the USSEC, said the country has a soybean complex, or value chain.

It includes whole soybeans, which are crushed to produce soybean meal for animal feed and soybean oil, he added.

The USSEC provides technical support, conducts workshops and seminars, shares knowledge and builds partnerships with industry players to strengthen the sector.

“Improving animal health will also improve the quality of food for human consumption and give people access to healthier food,” Khabibur said.

About 60 percent of the animal protein consumed in Bangladesh comes from fish and aquatic animals. To help ensure this protein supply, the USSEC provides technical support to fish farmers and aquaculturists in Bangladesh, he added.

Md Delwar Hossain, secretary of the Ministry of Fisheries and Livestock, said animal protein plays an essential role in building a healthy and well-nourished nation.

“Quality feed is the foundation for producing safe and high-quality protein,” he said.

Md Shah Alam Khan, director general of the Department of Livestock Services, said feed accounts for around 70 to 75 percent of total production costs in the poultry and livestock sectors.

The Bangladesh Freight Forwarders Association (BAFFA) has urged the government not to expand 100 percent foreign ownership in the country’s freight forwarding sector without assessing its economic impact on local entrepreneurs, employment and foreign exchange flows.

The association said freight forwarding is predominantly a service-based industry rather than a capital-intensive sector and raised the question of whether allowing unrestricted foreign ownership would bring substantial fresh foreign direct investment, technology transfer or new employment to Bangladesh.

BAFFA’s concerns came amid renewed regulatory attention to foreign-owned freight forwarding companies. On September 8, the National Board of Revenue (NBR) issued a clarification regarding the renewal of licences of fully foreign-owned companies that had received licences before July 1, 2015, under the Freight Forwarding Agents Licensing and Operations Rules, 2008.

BAFFA recently sent a letter to the NBR and the Prime Minister’s Office arguing against allowing 100 percent foreign ownership in the freight forwarding sector.

In the letters, BAFFA said any broader policy change should therefore be preceded by a comprehensive economic impact assessment and meaningful consultation with local industry stakeholders.

Local freight forwarders have spent more than three decades developing expertise, international agency networks and logistics capabilities that support Bangladesh’s import and export trade, BAFFA said in the letters.

The sector includes a large number of locally owned small and medium enterprises that coordinate international transportation, cargo consolidation, documentation, customs-related processes, supply chain management and other trade facilitation services.

BAFFA warned that allowing financially stronger multinational operators unrestricted access without appropriate regulatory safeguards could create an uneven competitive environment for domestic SMEs and potentially shift a greater share of locally generated logistics income abroad.

The association stressed, however, that its position should not be interpreted as opposition to foreign investment.

BAFFA said Bangladesh needs substantial foreign investment in logistics, but such investment should preferably be directed towards areas where fresh capital, infrastructure, technology and capacity are genuinely required.

These include ports and terminals, inland container depots, multimodal logistics hubs, modern warehousing, cold chain facilities, air cargo infrastructure, automation and digital logistics systems, the letters also read.

A new well at the Titas Gas Field in Brahmanbaria has started supplying 12.5 million cubic feet (mmcfd) of gas per day to the national grid, offering a modest boost to domestic production amid an ongoing supply shortage.

Bangladesh Gas Fields Company Limited (BGFCL) began supplying gas from the Titas-28 well following its formal inauguration today (19 September) by State Minister for Power, Energy and Mineral Resources Aninda Islam Amit.

Speaking at the inauguration, the state minister said the addition of 12.5mmcfd from the well was encouraging at a time when the country was facing an energy crisis.

"We have taken an initiative to drill 150 wells by 2030 to become self-sufficient in energy. Drilling of 27 wells is already underway. Titas-28 is one of them," he said.

He said three more wells are planned at the Titas field. If drilling is successful, they are expected to add another 45mmcfd of gas to the national grid.

The state minister said the government is working to increase domestic gas production as imported LNG has become increasingly expensive.

"We are buying LNG at two to three times the price we used to pay. We do not have the capacity to bear this cost," he said.

He also said domestic gas companies had remained neglected for around one and a half decades, limiting their ability to contribute to the country's energy supply.

"We have now created opportunities for these institutions to work. That is why they are being able to demonstrate their capabilities," Amit said.

The government is also working to strengthen state-owned Bangladesh Petroleum Exploration and Production Company Limited (Bapex) to increase domestic gas production, he said. Two drilling rigs are currently being procured, while another is also planned.

Local officials are also being trained so they can undertake exploration and drilling activities based on their skills and competence, he said.

Abdul Jalil Pramanik, managing director of BGFCL, said increasing local gas production is a priority as the country faces a major gas supply problem.

"Titas-28 is one of our initiatives to increase domestic gas supply. It is a shallow well. Our target is to increase gas supply through drilling deeper wells," he said.

He said drilling of the Titas-31 well is currently underway and described it as the country's deepest well drilling project.

Bangladesh has paused in borrowing from Japan as its interest rate on development finance has been steeply hiked and Dhaka's request for reconsidering the tightened terms went unheeded, officials say.

The rate of interest on Japanese development assistance has been raised for a six-month spell to 3.05 per cent, and it could go up to 3.55 per cent from next month, they have said.

Bangladesh used to enjoy an interest rate as low as 1.0 per cent in borrowing from the Japanese development-financing agency-- the Japan International Cooperation Agency (JICA)-until a few years ago.

In response to the steeper borrowing costs, Bangladesh has refrained from signing any new loan packages with its largest bilateral lender, they have said.

"Japan has recently informed us that the new rate is revised on global funding dynamics. This is not only for Bangladesh. This is for all borrowing countries of the Japanese ODA," a senior Ministry of Finance (MoF) official told The Financial Express.

"After the interest-rate hike in April, we requested Japanese lender - the Japan International Cooperation Agency--to reduce the rate for Bangladesh in view of global and local shocks."

For the current six-month window spanning from April to September, Tokyo ramped up interest rates for funding Bangladesh to a steep 3.05 per cent in April last.

The rate rise marks a drastic shift from historical agreements. Even as recently as 2022, Japanese Official Development Assistance (ODA) carried highly concessional rates below 1.0 per cent.

Once-most-concessional loan has become costlier as Japan has proposed to raise its interest rate by 30-percentage points to 3.05 per cent for lending to Bangladesh.

Earlier, the JICA used to charge 2.35 per cent on its loans against different development projects in Bangladesh.

Even three years ago, the interest rate for the Japanese loan was less than 1.0 per cent, the officials point out.

The Japanese development financier also charges a 0.02 per cent front-end fee for almost all the loans extended to Bangladesh, officials have said.

Bangladesh needs to repay the loans taken from Japan in 30 years wherein it will get 10 years as grace period for the payback.

As a least-developed country (LDC) with low income, Bangladesh had enjoyed Japanese loans with only 0.1 per cent interest until 2015.

Not only the rate for the infrastructure-related project loans has already gone up, the rate for the consultancy credit has also been raised to 1.0 per cent from the earlier rate of nearly 0.85 per cent, according to the Economic Relations Division (ERD) officials.

"The lending rate will be effective for six months up to this September as the JICA changes its lending terms and conditions for Bangladesh half-yearly," says one official.

A senior ERD official has said a fresh lending rate would be set from next month, October, with the indicative rate jacked up to 3.55 per cent.

Alarmed by the compounding strain on the national treasury, the Ministry of Finance and the ERD had formally lobbied Japanese authorities for a rate reduction, citing internal macroeconomic vulnerabilities and external economic shocks.

However, Japanese officials have maintained that the pricing adjustment stands firm, attributing it to shifts in global funding costs, inflation dynamics, and the broader normalisation of Japan's monetary policy.

Faced with a 3.05-percent price tag alongside a standard 0.02-percent front-end fee, Bangladeshi policymakers have quietly frozen new commitments with the lending agency JICA.

Official sources confirm that no fresh credit tranches have been finalised since the implementation of the hike in April.

Analysts note that at more than 3.0 per cent, Japanese funding has lost its long-held competitive advantage, now tracking higher than foundational lending rates from multilateral institutions like the World Bank and the Asian Development Bank, and even from China.

While legacy infrastructure megaprojects like Dhaka Metro Rail and Matarbari deep-sea port continue under previously secured funding tranches, new or pipeline development projects remain in limbo.

The ongoing stalemate highlights a critical turning point in the bilateral economic relationship, as Bangladesh balances its aggressive infrastructure ambitions against the tightening realities of increasingly expensive global debts.

Bangladesh currently is repaying loans from the World Bank at 1.75-percent interest, that from the ADB at 2.0 to 4.5 per cent, China at 2.0 per cent and IDB 2.0-4.0 per cent.

Japan is the single-largest bilateral development partner of Bangladesh-a position it has held consistently since 2012.

Since Bangladesh's independence in 1971, Japan has provided the country with approximately $33.62 billion in cumulative official development assistance, or ODA.

Current financial year's opening two month's borrowing of Tk 128.72 billion takes government's bank debt to a worrying total of Tk 6.98 trillion, as it turns increasingly to commercial lenders to meet financing needs.

A good sum of the money it borrowed at the outset of the fiscal year 2026-27, however, went for repaying back loans taken from the central bank of Bangladesh.

The government borrowed Tk 128.72 billion from the banking system during July-August while repaid Tk 37.28 billion to the central bank during the same period, according to Bangladesh Bank (BB) data.

The borrowing came from scheduled commercial banks as the government sought to meet development expenditure, social programmes, salaries and other recurrent expenses amid sluggish revenue collection.

Government's debt buildup to Tk 6.98 trillion raises concerns over its growing reliance on domestic bank financing and the potential implications for private-sector credit and investment.

For the current fiscal year, the government has set a target of borrowing Tk 1.12 trillion from the banking system. At the same time, revenue collection has failed to keep pace with the government's expending needs, increasing pressure on its cash position.

People familiar with the developments have said the government demand for cash has increased recently as revenue collection has not achieved the desired growth. At the same time, the government has had to borrow more from the banking sector to meet development expenditure, salaries and allowances, and other operational expenses.

Its excessive dependence on banks for funds could also create a crowding-out effect on credit flow into the private sector. If the government borrows more, a large portion of banks' funds goes to the public sector, potentially reducing the availability of loans for private entrepreneurs seeking to make fresh investment or expand commercial operations.

To reduce pressure from bank borrowing, analysts say, it is necessary to increase revenue collection, improve efficiency in tax administration and ensure greater discipline in government expenditure.

At the same time, strengthening domestic resource mobilisation could reduce dependence on bank borrowing, they add.

Meanwhile, the government is paying down its central bank loans.

Government debt to the central bank dropped by Tk 37.29 billion in the first two months of the fiscal year following recent payback

Excluding this repayment, the government's bank borrowing during the first two months of the current fiscal year stood at Tk 128.72 billion.

The government borrowed this amount through the Ways and Means Advance facility.

Ways and Means Advance is a short-term lending facility provided by the central bank to the government. This facility is used to meet temporary shortfalls or mismatches between the government's daily income and expenditure.

It is not a long-term loan but a temporary mechanism to maintain cash flow. Under the facility, the central bank provides funds to meet government's temporary cash shortage, and the loan generally has to be repaid within 90 days or three months.

When the government borrows from the central bank, it is considered financing through the creation of new money.

Syed Mahbubur Rahman , Managing Director & CEO of Mutual Trust Bank PLC, says government borrowing is a normal part of fiscal financing, but the key concern is its sustainability.

"Bangladesh's tax-to-GDP ratio remains one of the lowest among comparable economies, so strengthening revenue mobilisation has to be a priority. A broader and more efficient tax base would reduce the government's dependence on borrowing and create greater fiscal space for productive investment."

At the same time, the government needs to be very prudent in selecting projects, with greater emphasis on projects that generate economic returns and, where appropriate, sustainable revenue streams, rather than creating long-term fiscal burdens, he has stated.

In the fiscal year 2026, the government's bank borrowing exceeded the revised target by around Tk 220.00 billion, which indicates the extent of the trend. Bangladesh Bank data and recent reports also show that the government's FY26 borrowing exceeded its revised target amid weaker-than-expected revenue collection and higher financing requirements.

According to the latest report of Bangladesh Bank, the government's total outstanding borrowing from the banking system stood at Tk 6.98 trillion as of August. Of this, the government's total outstanding borrowing from the central bank stood at Tk 903.23 billion.

The government's total outstanding borrowing from commercial banks stood at more than Tk 6.08 trillion.

According to the data, the government borrowed over Tk 10.32 billion from non-bank financial institutions during the first two months of the current fiscal year.

At the end of the previous 2025-26 fiscal year, the government's outstanding bank borrowing stood at Tk 6.85 billion. At the end of the preceding 2024-25 fiscal year, the government's bank borrowing stood at over Tk 5.51 billion.

In the previous 2025-26 fiscal year, the government borrowed more than the target.

The government's net borrowing target from the banking sector was Tk 1.04 trillion in fiscal year 2025-26. However, by the end of the fiscal year, the government borrowing from banks stood at Tk 1.35 trillion. Mr Rahman said, "This is particularly important looking ahead. As the investment environment improves and private-sector credit demand recovers, continued heavy government borrowing from the banking system could put pressure on the availability and cost of funds for businesses, creating the potential for crowding out."

External borrowing also needs careful management, given the future foreign-currency repayment obligations. Ultimately, stronger revenue mobilisation, prudent borrowing and disciplined selection of productive projects will be essential to maintain fiscal sustainability while ensuring adequate financing remains available for private-sector growth, the MTB MD added.

Dr Masrur Reaz, chairman of Policy Exchange Bangladesh, says the government's growing reliance on bank borrowing reflects the pressure created by weak revenue mobilisation and a widening financing requirement.

"Borrowing from commercial banks may help the government manage its immediate cash-flow and financing needs, but sustained dependence on bank financing can gradually increase the government's interest burden and put pressure on the availability of funds for the private sector," he has said.

He suggests that the government should place greater emphasis on strengthening revenue collection, broadening the tax base and improving tax administration rather than relying increasingly on domestic borrowing.

"Unless revenue mobilisation improves significantly, higher government borrowing could crowd out private investment over time, particularly if credit demand from the private sector recovers.

"Fiscal discipline and stronger domestic resource mobilisation are, therefore, critical to reducing the government's dependence on bank borrowing," Dr Reaz concludes.

Bangladesh Bank has removed the term "large industry" from its Tk20,000 crore pre-financing scheme for reopening closed industrial and service-sector businesses, potentially expanding the pool of businesses eligible for the facility.

The central bank's Banking Regulation and Policy Department-1 issued a circular letter today (17 September), amending several provisions of the original circular issued on 4 June and a subsequent circular letter issued on 7 July.

Under the revised directive, references to "large industry" in the earlier circulars will be replaced with "industry", removing the previous qualification from the relevant provisions.

Bangladesh Bank launched the Tk20,000 crore "Closed Industry and Service Sector Support Pre-financing Scheme" in June to help restart businesses that have shut down. Under the scheme, banks can obtain funds from the central bank at 4% interest and lend to customers at a maximum rate of 7%.

The latest circular also clarifies the application window. Subject to the availability of funds, eligible businesses can apply for pre-financing at any time during the scheme's three-year tenure.

Banks receiving funds under the scheme will pay Bangladesh Bank interest at 4%. However, interest payments will begin six months after the pre-financing is received, with the outstanding interest for the first two quarters payable at that point.

For borrowers, the interest rate is capped at 7%. Banks will also start collecting interest six months after disbursing the loan, including the interest accrued during the first two quarters.

The Bangladesh Bank said the revised directive would take effect immediately, allowing eligible businesses to seek the facility throughout the three-year tenure, subject to fund availability.

The Federal Reserve yesterday (16 September) raised interest rates by 0.25 percentage points from 3.50-3.75% to 3.75-4.00% as inflation has become a concern. With this rate hike, the Fed aims to reduce borrowing and spending, cool demand, and bring inflation under control.

Inflation in the USA remains above the Federal Reserve's 2% target. As of July 2026, inflation was 3.7%. Higher energy prices, import tariffs, and strong investment and demand have continued to push prices higher.

With higher interest rates, loans are expected to become more expensive for households and businesses. This generally discourages consumption and investment and gradually eases price pressures.

Although the Fed raised US interest rates, its impact extends to the global economy through multiple channels. Higher rates make dollar-denominated investments more appealing, which encourages international investors to shift funds to the USA. This increases demand for dollars and strengthens the dollar, while currencies in developing countries come under downward pressure.

For governments and companies, borrowing dollars also becomes more expensive. Developing countries that seek new international financing may have to accept higher interest rates. Their repayment conditions could also become more difficult. Countries with large external debts, limited foreign-exchange reserves, or high levels of short-term borrowing are more likely to face increased pressure.

Global commodity markets may have an indirect impact. If rising US interest rates curb worldwide economic growth, demand for oil and other commodities could fall, lowering prices. This might benefit import-dependent countries like Bangladesh.

However, this relief remains uncertain because geopolitical tensions, conflicts, and supply disruptions can still affect global energy prices.

Besides, a stronger US dollar might offset some declines in international commodity prices. Since Bangladesh pays for most imports in dollars, a weaker taka could limit the benefits of moderate drops in oil, gas, fertiliser, or food prices for Bangladeshi consumers and businesses. The overall impact will hinge on changes in global commodity prices and the USD/BDT exchange rate.

In Bangladesh, a key issue is the increased pressure on the Bangladeshi Taka (BDT). A stronger dollar would raise the local cost of imported fuel, food, fertiliser, machinery, and industrial raw materials.

This could lead to higher inflation, increased production costs, and reduced household purchasing power. Businesses that rely heavily on imported inputs may face profitability challenges and may pass some of these costs on to consumers.

In such situations, Bangladesh Bank may feel compelled to sell dollars from its foreign-exchange reserves to curb excessive exchange-rate volatility. Some intervention may be necessary to prevent disorderly swings and sudden market instability.

However, consistently drawing on reserves to keep the exchange rate artificially stable is unsustainable. The BDT should be allowed to adjust gradually and transparently in line with market conditions. A credible exchange-rate system helps reduce uncertainty for importers, exporters, foreign investors, and remittance senders.

Bangladesh's external debt costs could rise as USD interest rates increase. Government agencies and private companies with variable-rate or dollar-denominated loans could face higher interest payments. Additionally, if the taka depreciates, repayment costs will rise further, as borrowers will need more taka to buy each dollar.

New foreign borrowing for infrastructure, power, energy, and private investment could become more expensive. Therefore, projects should be selected carefully. Foreign loans should be directed to economically viable projects that can generate sufficient economic returns or foreign exchange earnings. Projects with poor financial prospects could strain the budget and external debt repayment obligations.

The USA is the biggest market for Bangladesh's ready-made garments (RMG). If high interest rates curb US consumer spending, demand for clothing and other non-essential products might decline. Bangladeshi exporters could see fewer orders, face increased pressure from buyers to lower prices, and experience thinner profit margins. Smaller factories, with less ability to absorb rising financing, energy, and input costs, may be especially at risk.

However, a quarter-percentage-point hike alone probably would not lead to a sharp drop in garment demand. The overall effect will depend on factors like the US labour market strength, consumer confidence, inflation, and economic growth.

Bangladesh's competitiveness will also be affected by exchange-rate changes in countries such as Vietnam, India, China, and Pakistan. If their currencies depreciate faster than the taka, Bangladeshi exporters may face increased competition.

As a remittance-receiving country, Bangladesh may also feel the impact. However, the impact on remittances could be mixed. A stronger dollar boosts the taka value of remittances for Bangladeshi families, supporting household spending.

Still, formal remittance inflows will remain robust only if banks offer competitive exchange rates and the gap between formal and informal rates stays narrow. The government must encourage migrant workers to use official channels through transparent, market-driven exchange rates, faster transfer services, and lower costs.

As far as investment is concerned, higher returns on safer US assets might make foreign investors more cautious about Bangladesh, though significant portfolio outflows are unlikely. Investment decisions are strongly influenced by challenges such as energy shortages, regulatory uncertainty, exchange-rate risk, and difficulties repatriating profits.

These internal limitations may matter more than short-term portfolio shifts. Therefore, Bangladesh must strengthen its domestic investment environment, which is particularly crucial now.

Bangladesh Bank decreased policy rates on 30 July 2026 by 50 basis points, from 10% to 9.5%. This move aimed to bolster economic growth, promote private investment, and enhance credit flow following a lengthy period of restrictive monetary policy.

It also reflected concern over sluggish economic activity and subdued private-sector credit growth. Currently, Bangladesh Bank's room to lower domestic interest rates further is limited, given that inflation remains high.

While affordable credit is essential to support investment and employment, hastily lowering rates could weaken the taka, increase dollar demand, and fuel inflation. Therefore, Bangladesh's domestic policy should balance controlling inflation, maintaining exchange-rate stability, safeguarding financial sector health, and ensuring access to productive credit.

Overall, the consequences of the Fed's interest rate hike will depend more on the future path of US rates than on this single increase. Bangladesh should maintain a flexible, stable exchange rate, safeguard reserves, promote remittances through formal channels, restrict costly foreign borrowing, and monitor companies' foreign-currency risk.

At the same time, stronger fiscal discipline, better debt management, and improved banking governance are essential. In the medium term, Bangladesh needs to diversify exports and markets, enhance energy security, boost productivity, and increase investor confidence. These actions would help the economy withstand higher US interest rates and future external shocks.

Fahmida Khatun is a distinguished fellow at the Centre for Policy Dialogue (CPD).

Bangladesh and Turkey have discussed ways to expand bilateral cooperation in the energy sector, particularly in renewable energy, mineral resources and LNG-related infrastructure.

The discussions also covered pipeline connectivity linking Bangladesh's offshore and island facilities with the mainland.

The issues were discussed at a recent meeting between Turkey's Energy and Natural Resources Minister Alparslan Bayraktar and Bangladesh Ambassador to Turkey M Amanul Haq at the Ministry of Energy and Natural Resources in Ankara.

According to the Bangladesh Embassy, the two sides explored potential areas of practical cooperation in the energy and mineral resources sectors and discussed opportunities to further strengthen bilateral collaboration.

During the meeting, Ambassador Haq handed over an invitation letter from Bangladesh Foreign Minister Khalilur Rahman, inviting Minister Bayraktar to visit Bangladesh at a mutually convenient early date.

Baraktar warmly accepted the invitation and expressed his intention to visit Bangladesh by the end of this year.

The Turkish Minister also instructed his officials to prepare a Memorandum of Understanding (MoU) for signing at the next possible opportunity, the Bangladesh Embassy said.

Ambassador Haq also handed over a proposed draft MoU between Bangladesh's Ministry of Power, Energy and Mineral Resources and Turkey's Ministry of Energy and Natural Resources, aimed at establishing a framework for enhanced bilateral cooperation in the energy sector.

The meeting was attended from the Bangladesh side by Deputy Chief of Mission Shahanoor Alam and Commercial Counsellor Akram Hossain of the Bangladesh Embassy in Ankara.

Senior officials from Turkey's Ministry of Energy and Natural Resources also attended the meeting.

Bangladesh Jewellers Association (BAJUS) has raised gold prices again, increasing the price of 22-carat gold by Tk1,691 per bhori to Tk2,34,621, including VAT.

BAJUS announced the new prices in a notice today, saying the price of tejabi gold (pure gold) had increased in the local market. Considering the overall market situation, the association revised the prices, which came into effect from 10am today (19 September).

Under the new rates, one bhori (11.664 grammes) of 21-carat gold has been set at Tk2,24,065 per bhori, 18-carat gold at Tk1,92,398 and traditional-method gold at Tk1,57,172.

BAJUS said the new prices will remain effective at all jewellery shops until further notice. However, labour charges will apply depending on the design of the jewellery.

As VAT is included in the selling price of gold and silver jewellery, jewellers cannot collect VAT separately from customers. BAJUS's previous rules will remain in place for jewellery exchange and purchase, excluding specified VAT, labour charges and the price of stones.

BAJUS last adjusted gold prices on 12 Sept, when it raised the price of 22-carat gold by Tk1,050 per bhori to Tk2,32,930, including VAT.

So far in 2026, gold prices in the country's market have been adjusted 116 times. Prices have been raised on 58 occasions, lowered on 57 occasions, and VAT adjusted once.

Meanwhile, silver prices have also been increased. The price of 22-carat silver has been raised by Tk116 per bhori to Tk5,132, including VAT.

The price of 21-carat silver has been set at Tk4,957 per bhori, 18-carat silver at Tk4,257 and traditional-method silver at Tk3,208.

Silver prices have been adjusted 70 times so far in 2026, with prices increased on 36 occasions and reduced on the remaining 34 occasions.

The Insurance Development and Regulatory Authority (IDRA) will take stricter measures against non-complying distressed insurance companies, its chairman has said.

“We are prepared to go much further if necessary,” said Mir Nadia Nivin, chairman of IDRA, referring to insurers currently under financial distress.

Its regulatory tools include suspending first-year premium collection, cancelling licences, appointing administrators and, ultimately, liquidating companies, she shared in a recent interview with The Daily Star.

“Sixty percent of the time, I will work as a partner to support the companies, but 40 percent of the time I will act as a regulator,” she said. “If they do not comply with the regulator’s instructions, they cannot be allowed to continue doing business.”
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Fareast Islami Life Insurance Company Limited illustrates the scale of the challenge. The company has outstanding claims of around Tk 3,000 crore, while its recoverable assets could amount to roughly Tk 1,200-Tk 1,300 crore, according to Nadia.

The company’s first-year premium collection has been suspended, preventing it from expanding its business while its existing obligations remain unresolved.

“If you sell a policy knowing that you will not be able to pay the claim, that can amount to fraud,” she said.

Nadia said the regulator’s immediate objective is to use available assets to pay as much as possible, rebuild confidence and then assess whether the company can be turned around.

But resolving the sector’s immediate crisis is only one part of her reform agenda. Her longer-term goal is to transform insurers into a significant institutional investor class.

In developed economies, she said, life insurers invest over long periods because their liabilities themselves are long term. Bangladesh could use the same model to finance infrastructure.

The government appointed Nadia as the chairman of the IDRA for a three-year term in June this year.

A Bangladeshi governance and institutional reform specialist, she served as a member of the Electoral System Reform Commission, established by the interim government in October 2024.

She said Bangladesh’s insurance sector needs deep institutional reform, stronger financial discipline and a fundamental shift in governance if it is to regain public confidence and emerge as a major source of long-term investment.

Nadia said she took charge of IDRA because she believed her reform experience could be applied to a sector facing entrenched irregularities and a severe trust deficit.

Her immediate priority, however, is ensuring that policyholders receive the money they are owed.

Insurance penetration in Bangladesh is only around 0.3 percent and has been declining, she said, reflecting a growing loss of confidence among customers who often do not receive claims on time.

“When I came into this position, I realised that the biggest reason for the sector’s trust deficit is that people are not getting their claims on time,” Nadia said.

IDRA has therefore begun with the most distressed insurers, particularly seven or eight companies with large volumes of unsettled claims. Their owners and management have been brought into governance review meetings, while the regulator has begun examining their assets, liquidity and ability to pay.

Nadia said companies cannot use past management failures as an excuse for avoiding their obligations.

“Under Bangladeshi law, a company is a separate entity. Whatever the previous board did is a different issue. The company remains responsible to its policyholders,” she said.

IDRA has collected information on the assets of the distressed companies, including government bonds, fixed deposits, bank balances and land.

It is also working with Bangladesh Bank to release funds trapped in financially vulnerable banks so that the money can be used for claim settlement.

Land assets are being identified, valued and prepared for sale where necessary.

To prevent funds raised through asset sales, bond liquidation or fixed deposits from being diverted elsewhere, the companies have been instructed to maintain separate bank accounts for claim payments. Auditors have been assigned to monitor those accounts, with regular statements being submitted to IDRA.

Payments are being made on a first-in, first-out basis, with claims verified by auditors.

As part of this, a total of Tk 37.54 crore in insurance claims has been paid to 8,417 policyholders of seven troubled life insurers in two phases under an initiative of IDRA.

In the first phase, Tk 14.51 crore was paid to 2,549 policyholders of BAIRA Life Insurance, Fareast Islami Life Insurance, Golden Life Insurance, Homeland Life Insurance, Padma Islami Life Insurance, Progressive Life Insurance and Sunflower Life Insurance.

In the second phase, Tk 23.03 crore was paid to 5,868 policyholders of Padma Islami Life Insurance, Homeland Life Insurance, Fareast Islami Life Insurance, Sunflower Life Insurance and Sunlife Insurance.

Strengthening the industry will require reforms inside individual companies as well. IDRA is examining life funds, actuarial valuations, paid-up capital, special audits, investment practices and compliance with previous audit recommendations, she said.

One concern is that actuarial valuations may sometimes rely on assumptions that make a company’s financial position appear stronger than it actually is, she added.

Because the actuarial market in Bangladesh is small and potential conflicts of interest exist, IDRA plans to retain an independent third-party actuary, potentially from overseas, to review the basis used by insurers for their valuations, she mentioned.

The authority has also tightened controls over paid-up capital. In coordination with Bangladesh Bank, insurers will no longer be able to withdraw, pledge or otherwise transact against paid-up capital without IDRA’s authority.

Investment practices are another area of scrutiny.

Nadia said insurers need to reduce their exposure to land, with the regulator seeking to bring land investment within the permitted 20 percent threshold. Companies with excess land holdings may be required to liquidate those assets and place the proceeds into appropriate investments.

At the same time, IDRA is trying to improve the quality of company leadership. Several insurers still have interim or acting chief executives and managing directors. The regulator plans to create a broader, pre-vetted pool of candidates rather than limiting recruitment to people with insurance-sector experience, she said.

“We do not believe they necessarily have to come from the insurance sector,” Nadia said. “They can come from banking or other parts of the financial sector.”

Climate risk is another area where she sees scope for innovation.

IDRA is working on parametric insurance products, where payouts are triggered automatically by predefined events rather than requiring conventional claims assessment.

A flood insurance pilot linked to the Jamuna River project has already made payouts of around Tk 14 crore across five districts through mobile financial services, she said.

Crop insurance is also being developed with the Ministry of Agriculture, while a small heat-insurance pilot is being considered with support from the Asian Development Bank.

The regulator plans to use its regulatory sandbox to test innovative products before wider rollout. Ultimately, however, Nadia believes the sector cannot be transformed without better data and stronger supervision.

IDRA’s public dashboard, which previously provided information on claims, lapsed policies and other indicators, has not been regularly updated in recent years.

The authority now plans to restore the dashboard as part of a broader shift towards risk-based supervision, she added. Once the system is fully operational, IDRA should be able to monitor insurers in near real time, including how many claims they are settling.

“Claim settlement will be one of our indicators,” Nadia said. “If claim settlement keeps increasing, we will know that our initiatives are working.”

For her, the broader challenge is to move insurance away from being viewed primarily as a product sold to customers and towards becoming a financially disciplined institution capable of protecting policyholders, supporting the capital market and mobilising long-term funds for the economy.

That will require stricter regulation, but also cooperation from insurers, she added.