The tea stall in Mohammadpur opens before the light does. A kettle hisses. Oil spits in a pan. The first customer is a rickshaw puller who has already counted the coins in his pocket twice. He orders what he always does: two buns and a glass of tea.

The tea costs Tk10. The buns are supposed to cost Tk10 each. But when he breaks one open, he notices what the sticker will not tell him. The bun is smaller. Not by much. But enough.

This is not a story about scarcity. It is a story about arithmetic performed in silence, at the bottom of a supply chain that stretches from the Black Sea to a cold storage in Rangpur, and ends at a tea stall where the numbers never quite add up for the person who can least afford the difference.

The bakery association had announced it would raise prices by up to 20% starting 12 September. A sack of refined flour had jumped from Tk3,000 to Tk5,600. A drum of cooking oil rose from Tk25,000 to Tk36,000. Sugar hit Tk120 to 125 per kilogram, up roughly Tk10 in a week. Bakery owners said production costs had climbed 20% to 30% over six months, driven by raw materials, energy, and transport.

On 15 September, the commerce ministry called a meeting. A committee was formed, led by the chairman of the Bangladesh Trade and Tariff Commission, and given seven days to study the problem. The bakers agreed to put the hike on hold "for the time being." The headline said prices were stable.

What the headline did not say is what the bakers had already planned for the cheapest items. For the Tk10 bun, there would be no price increase. Instead, the bun would shrink. A 40 gram bun could lose about 5 grams. A 400 gram loaf could drop to 320 or 350 grams if the price stayed the same. The association called it a "modest adjustment." The customer, if he is paying attention, might call it something else.

The rickshaw puller knows the bun is smaller. He does not need a committee to tell him. He buys two buns instead of one, because one no longer fills the gap between breakfast and the first fare of the morning. His lunch just cost Tk20 instead of Tk10. The government held the price. The market held the scale. He held the difference.

This is not a case of scarcity. It is a structural condition of a country that imports more than 80% of its wheat. Domestic production meets less than 10% of demand. Bangladesh imported a record 7.25 million tonnes of wheat in the 2025-26 fiscal year, the highest in its history.

Meanwhile, the area under wheat cultivation fell from 4.44 lakh hectares in 2015-16 to 2.8 lakh hectares in 2024-25, the lowest in at least a decade. Farmers are switching to maize and vegetables because wheat simply does not pay. When the global market moves, Bangladesh feels it. When the dollar strengthens, Bangladesh feels it. When a ship is delayed at a foreign port, the tea stall in Mohammadpur feels it.

This is not a case of scarcity. It is a structural condition of a country that imports more than 80% of its wheat. Domestic production meets less than 10% of demand. Bangladesh imported a record 7.25 million tonnes of wheat in the 2025-26 fiscal year, the highest in its history.

The data tells a story of pressure that has not eased. Overall inflation in August was 8.26%, down slightly from July. Food inflation was 7.02%. Rural inflation, where the poorest households live, was 8.31%, higher than the national average. The committee's report will not change these numbers. The report is not designed to change them. It is designed to buy time.

The government bought seven days. In seven days, the headlines will move on. The committee will submit its findings. The price hike may be gradually implemented or restructured into another form of shrinkflation. The problem will remain: a nation that cannot feed its bakeries without ships from abroad, and a working poor that measures its day in buns that keep getting smaller.

The rickshaw puller in Mohammadpur has finished his tea. He has two buns in his hand, each one slightly lighter than it was last week. He does not know about the committee. He does not know about the Trade and Tariff Commission, or the seven day deadline, or the press release from the commerce ministry. He knows what his hands know. He knows the bun is smaller. He knows he is still hungry.

The government held the price. The market held its breath. And the man with the rickshaw held the difference, one gram at a time.

Zakir Kibria is a Bangladeshi writer, policy analyst and entrepreneur based in Kathmandu, Nepal. His email address is zakir.kibria@gmail.com

Ending a continuous depreciation trend spanning five and a half years, the Bangladeshi Taka (BDT) has shown signs of appreciation against the US dollar, according to a Bangladesh Bank (BB) report released on Sunday.

On a point-to-point basis from June last year to June this year, the value of the Taka appreciated by 0.06 per cent. Furthermore, between August 30 and September 17, the local currency strengthened by 0.77 per cent against the greenback.

Central bank data shows that the Taka experienced an unbroken streak of depreciation against the US dollar from 2021 until September 17 this year. During this period, the exchange rate surged from Tk 85.80 per dollar to a record high of Tk123.95—reflecting a devaluation of Tk 38.20, or 45.05 per cent, reports UNB.

However, the trend began reversing in the second half of this year. After peaking at Tk 123.95 on August 30, the dollar rate dropped by 95 paisa to Tk 123.00 on September 17, resulting in a 0.77 per cent gain for the Taka over those three weeks.

According to central bank statistics

End-December 2019: The dollar traded at Tk 84.90.

End-December 2020: The dollar fell by 10 paisa to Tk 84.80, appreciating the Taka by 0.12 percent due to lower pandemic-era import demand, reduced global commodity prices, and robust remittance inflows.

End-December 2021: Rising import demand and surging global prices pushed the dollar to Tk85.80, devaluing the Taka by 1.18 per cent.

End-December 2022: Fueled by the Russia-Ukraine war, global fuel and commodity prices spiked, increasing import bills while exports and remittances slowed. The dollar jumped to Tk105.85—a Tk 20.05 or Tk23.37 per cent increase—devaluing the Taka by an equivalent margin.

End-December 2023: Continued pressures raised the dollar rate by Tk4.15 or 3.92 per cent to Tk 110.00.

End-December 2024: The dollar climbed another Tk 10.00 to Tk 120.00, eroding the Taka’s value by 9.09 per cent over the year.

End-December 2025: Depreciation persisted as the dollar reached Tk122.33, up Tk 2.33 or 1.94 per cent over the year.

The Bangladesh Bank report also compared regional currency movements from June last year to June this year

Depreciated Currencies: The Indian Rupee depreciated by nearly 9.5 per cent, the Sri Lankan Rupee lost over 10 per cent, and the Indonesian Rupiah declined by around 9 per cent.

Appreciated Currencies: The Malaysian Ringgit and Chinese Yuan both gained nearly 4.0 per cent, while the Pakistani Rupee appreciated by around 2.0 per cent.

The central bank noted that after a prolonged period of weakening, the Bangladeshi Taka has shifted to a relatively stronger position.

Economic Implications:

A depreciating Taka directly elevates import costs for fuel, industrial raw materials, and food items, passing price increases onto consumers, driving inflation, and dampening real purchasing power—especially for low- and middle-income households. It also increases the domestic currency burden of servicing foreign debt.

Conversely, a strengthening Taka relieves pressure on import expenditures and lowers the local currency cost of foreign debt servicing, though the broader impact will depend on future trends in imports, exports, remittances, foreign exchange reserves, and international market conditions.

Liquidity crunch looks to be a thing of the past now as affluent commercial banks in particular fret over deposit buildup amid squeezing investment avenues for economic slowdown,

An analysis of the paradoxical situation shows various regulatory moves and deposit-mobilising drives by the country's banks helped in gradually restoring people's once-shaken trust in the banking sector. As such, the deposit growth keeps rising, which basically helps boost their stock of excess liquidity.

But such liquidity buildup fails to lighten up mood of the bankers because the demand for private-sector credits has not picked up despite various regulatory moves. On the other hand, yields on government securities are on a downturn feeding on an abundance of liquidity in the banking system.

As such, depositors begin to bear its domino effect as banks having surplus liquidity keep cutting deposit rate to lessen the liability while many of them are parking record amounts of surplus funds with the central bank's low-yielding deposit window called Standing Deposit Facility (SDF).

The SDF rate has come down to 7.50 per cent, much lower than that of call money.

According to Bangladesh Bank (BB) data, the deposit growth in the banking system was recorded at 7.77per cent in June last year. Afterwards, it started rising to reach 10.44 per cent in January this year followed by 10. 74 per cent and 11.36 per cent in June and July last respectively.

Seeking anonymity, a BB official said the volume of excess liquidity in the banking industry continued to rise in recent months due mainly to shrinking investment avenues under this macroeconomic sluggishness.

Citing data, the central banker said the volume of excess liquidity was less than Tk 2.80 trillion few months ago but it rose to Tk 3.37 trillion by end of May last--and the rising trend continued.

"So, this (excess liquidity) puts the banks in a problem as loan demand weakens. That's why banks are heavily relying on SDF," the BB official said.

According to the BB data, affluent banks all together kept around Tk 1.50 trillion in the SDF in June last, which is a record in the history of the banking sector.

The official data showed the monthly volume of funds banks parked into the SDF were recorded Tk 545 billion, Tk 578 billion, Tk 444 billion and Tk 444 billion in February, March, April and May last.

Syed Mahbubur Rahman, Managing Director and Chief Executive Officer of Mutual Trust Bank (MTB), feels the growing buildup of excess liquidity is likely to become a pressing challenge for many banks as investment avenues continue to shrink amid prolonged economic sluggishness.

He explains that, in terms of incremental deposit costs, banks are barely making any money, while blended deposit costs remain manageable for some institutions-at least for those considered better managed.

However, Mr. Rahman has cautioned that if the situation persists, commercial banks may ultimately have no alternative but to reduce both deposit and lending rates. In such a scenario, deposit rates may even fall further, thereby rendering the real income of depositors negative.

Managing Director and CEO of Southeast Bank Md. Khalid Mahmood Khan has said the bank has a target of reaching deposit portfolio of Tk 500 billion by the end of upcoming December but they have already reached the milestone.

The lender is concentrating on profitability buildup through reducing the cost of deposit. They have already cut the deposit rate by 50 basis points and the bank will hold an ALCO meeting later this week where further cut in deposit is expected.

Managing Director of Shahjalal Islami Bank Mosleh Uddin Ahmed says the rising stock of un-invested liquidity in banks is turning into a headache for many of them in recent months due to plummeting loan demand.

On squeezing investment avenues, the seasoned banker says the use of central bank's overnight deposit window called SDF by affluent banks is increasing.

According to the BB data, the private-sector-credit growth reached 4.62 per cent by end of July, the second lowest in the history of Bangladesh.

Director-General of Bangladesh Institute of Bank Management (BIBM) Dr Md. Ezazul Islam notes that the liquidity glut in the banking sector is being created because of weak loan demand.

But the number and volume for the opening of LCs or letters of credit are increasing gradually, which gives early indication of economic recovery under the regime of this elected government.

"It's a temporary problem. I believe the credit demand from private sector would go up from the last quarter this year," the economist said, on a note of optimism.

The yields on 91 Days, 182 Days and 364 Days treasury bills stood at 8.31 per cent, 8.45 per cent and 8.47 per cent on Sunday.

At least $1.5 billion in identifiable corporate investment plan has been affected over the past four years as businesses were hit by external shocks, domestic political uncertainty, high borrowing costs and energy crises.

The investment plans and projects, disclosed by at least 10 companies and reviewed by The Daily Star, show how the turbulent business climate is weighing on private investment.

In taka terms, the total amount is equivalent to around Tk 18,000 crore, while at least 125,000 new jobs could have been created if the investments had materialised.

Some companies have scaled back expansion plans, while others have delayed projects or invested in manufacturing lines that have yet to begin production.

The consequences are being felt across the economy.

Delayed investment means factories remain unproductive, planned production and exports are held back, and thousands of potential jobs do not appear at all.

Businesses and economists say these problems are also discouraging new investment at a time when weak demand, high inflation and tight financing are already hurting economic activity.

BIG INVESTMENTS NEED PREDICTABILITY

Apparel manufacturer and exporter Newage Group planned a factory expansion worth around Tk 100 crore last year. But political uncertainty following the July Uprising got in the way of the plan.

“For me, the biggest concern is not the availability of opportunities, but the predictability required to make a long-term investment decision,” said Asif Ibrahim, vice chairman of the group.

After the general election in early 2026, Newage found its existing plants struggling by mid-year because of energy shortages. The setback led the company to shelve the expansion plan for now.

Asif said businesses need reliable energy, competitive financing, minimum predictable policies and economic stability before making major commitments.

The businessman’s comments show that political uncertainty and energy shortages did not occur in isolation. Rather, they were the latest in a series of business obstacles over the years.

For example, Maf Shoes, a sister concern of TK Group, announced a Tk 1,118 crore investment at the National Special Economic Zone in Mirsarai, Chattogram, in 2023. The investment was meant to set up an export-oriented footwear manufacturing unit and backward-linkage production lines for the shoemaker.

“We wanted to increase our exports and provide backward-linkage products to local footwear manufacturers,” said Mohammad Shahadat Ullah, executive director of Maf Shoes.

But the prolonged Russia-Ukraine war, the latest Middle East conflict, high borrowing costs and persistent energy shortages forced the company to put the plan on hold, he said.

Shahadat said the company has decided to restart the project on a smaller scale, which would be completed within two years. But the revised investment plan is yet to be finalised.

He said uninterrupted gas and electricity supplies are their first requirement for expansion.

DELAYED PROJECTS RAISE COSTS

Whenever a business postpones an investment plan, one of the first and almost certain consequences is that the project will require more money in future.

For example, N Mohammad Plastic Industry Ltd, a concern of Chattogram-based N Mohammad Group, took up an expansion initiative in 2022. The initial cost estimate was Tk 500 crore.

But amid the Covid pandemic, external shocks and a worsening dollar crisis in Bangladesh, the plan was pushed to December 2025.

Though the group resumed the project last year, its cost has risen by more than 60 percent, according to Mohammad Nazrul Hoque, managing director of N Mohammad Group.

He said the company has spent more than Tk 60 crore developing the 10-acre site, but further investment remains stalled because of unreliable gas supplies.

“Without dependable gas, it is not commercially viable to proceed,” said Nazrul.

Another example of delays costing businesses is Bashundhara Multi Steel Industries. In 2022, it announced a 12.5-lakh-tonne-a-year steel plant at National Special Economic Zone, with around 7,000 potential direct jobs.

Masudur Rahman, media coordinator of Safwan Bashundhara Global, said eight banks approved a syndicated loan of Tk 2,305 crore, of which Tk 540 crore had been disbursed.

But the investment then faced a gas supply uncertainty. Currently, machinery worth hundreds of crores has been lying idle at the half-built factory, he added.

Masudur said the project cost has meanwhile risen from Tk 4,146 crore to Tk 7,118 crore because of delays, higher financing costs and taka depreciation.

FACTORIES READY, BUT GAS HOLDS THEM BACK

Three factories of Meghna Group of Industries at the Cumilla Economic Zone have remained idle for four years. The group invested around $700 million in a steel mill, glass plant and paperboard factory but has been unable to start production because gas and electricity supplies remain unavailable.

Since 2022, the group has incurred around Tk 80 crore in annual losses maintaining the idle facilities. It also provided Tk 100 crore each for grid development and Gas Transmission Company Limited (GTCL) pipeline infrastructure to accelerate connections.

The country’s first electric vehicle manufacturer, Bangladesh Auto Industries Ltd (BAIL), has readied its factory at the National Special Economic Zone in Mirsarai of Chattogram.

“We are 100 percent ready. We are only waiting for the gas connection,” said Mir Masud Kabir, managing director of BAIL. “Once we get it, we can start within seven days.”

Masud said BAIL’s investment in the vehicle project has reached around Tk 700 crore.

Contacted over new factories waiting for gas lines, Kazi Mohammad Saidul Hasan, general manager (Operations Division) of Titas Gas Transmission and Distribution PLC, said around 500 applications for industrial connections are currently pending with them.

But there is little prospect of providing new connections because of gas shortage, said Saidul. He said there would be no possibility of providing fresh industrial gas connections until 2030.

“Titas Gas is helpless in this regard,” he said.

The energy weakness is reflected in private credit demand for commercial lenders.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, said weak private-sector credit growth reflects subdued business activity. “If exports are not growing, why would an entrepreneur borrow to build a new factory when demand is weak?” he asked.

Taskeen Ahmed, president of the Dhaka Chamber of Commerce and Industry, said private investment stood at around 21.2 percent of GDP in fiscal year 2025-26, while net FDI fell to about $1 billion and credit growth dropped to 4.47 percent, its lowest level in 33 years.

A WARNING FOR ECONOMY, EMPLOYMENT

Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), said the postponement of more than $1.5 billion in corporate investment is a serious warning for the economy and employment.

“Investment delays mean delayed factories, production and exports, as well as thousands of potential jobs,” he said.

The economist said the energy shortage remains one of the most immediate constraints facing potential investors.

M Masurur Reaz, chairman and CEO of Policy Exchange of Bangladesh, said continued high inflation, sluggish demand, energy disruptions and high borrowing costs are weighing on investment and weakening investor confidence.

Reaz said rebuilding confidence would require focused action on energy security, financing, foreign exchange, regulation and policy predictability.

Eastern Bank emerged as the top turnover leader on the Dhaka Stock Exchange (DSE) today (20 September), marking a notable surge in trading activity for the bank's shares.

According to DSE data, EBL shares worth Tk36.94 crore changed hands during the session, with 1.61 crore shares traded through 1,773 transactions.

The lender's sudden rise to the top of the turnover board is notable, as the stock has rarely led the DSE's daily turnover chart in recent times, according to market insiders.

Despite the heavy trading activity, EBL shares closed unchanged at Tk22.90, the same as the previous session.

The stock opened at Tk23 against an adjusted opening price of Tk22.90 and traded between a high of Tk23.10 and a low of Tk22.70 during the session.

At the latest closing price, EBL's total market capitalisation stands at Tk3,764 crore, with a free float market capitalisation of Tk2,615 crore.

Earlier, Eastern Bank posted a 25% year-on-year growth in consolidated net profit for the first half of 2026, reaching Tk439 crore for the January–June period. Consolidated earnings per share rose to Tk2.67 from a restated Tk2.14 in H1 2025.

The bank attributed its robust earnings growth to higher returns from government securities amid elevated treasury yields, alongside steady growth in non-funded income and improved operational efficiency.

On the turnover chart, Sharp Industries secured the second position with trades amounting to Tk25.84 crore, while IPDC Finance Limited came in third with shares worth Tk23.07 crore traded.

Other top-traded stocks of the day included Paramount Textile, Bangladesh National Insurance, Saiham Textile, Asiatic Laboratories, Lovello, Envoy Textile, and Reliance Insurance.

The Dhaka Stock Exchange's benchmark index rose 60 points today (20 September), extending its winning streak to four sessions and taking its cumulative gain to 213 points, as broad-based buying and higher turnover signalled a revival in investor participation after the market's recent sharp correction.

The DSEX closed at 5,592 today, up nearly 4% from 5,379 on 14 September. The DSE30, the blue-chip index, gained 20 points to 2,121, while the DSES, the Shariah-based index, rose 12 points to 1,119.

Turnover increased 14% from the previous session to Tk747 crore, while 287 of the 388 traded issues advanced. Only 62 declined and 39 remained unchanged, indicating that the buying was spread across a large number of securities rather than being concentrated in a few stocks.

Market participants said the recent recovery was mainly to bargain hunting following the sharp correction, expectations of improved gas supplies to industries, stronger buying in banks and other active sectors, and improved investor sentiment following Moody's decision to revise Bangladesh's sovereign outlook.

The market began recovering after the DSEX fell to 5,379 on 14 September following several sessions of decline. Since then, investors have increasingly returned to beaten-down stocks, taking advantage of lower prices.

EBL Securities, in its daily market commentary, said bargain hunters were accumulating beaten-down stocks as strong investor participation and broad-based buying supported the recovery. The brokerage, however, noted that concerns over the market's near-term trajectory and heightened geopolitical tensions in the Gulf region remained.

Expectations of improved gas supplies have also helped ease some concerns over the earnings outlook of industrial and manufacturing companies. Gas shortages have disrupted production and raised concerns about corporate sales and profitability. Recent assurances of improving supplies have therefore provided some relief to investors.

Meanwhile, Moody's revised Bangladesh's sovereign outlook from "negative" to "stable" while maintaining its long-term issuer rating at B2. Market analysts have cited the change as another factor that has supported investor sentiment in recent sessions.

Buying interest was particularly visible in the Textile, General Insurance and Bank sectors. Textile accounted for the largest share of turnover today at 24%, followed by General Insurance at 13.2% and Bank at 12%.

All sectors posted positive returns during the session. Mutual Fund gained the most, rising 2.8%, while Cement and Financial Institution each advanced 2.6%.

The recent decline in Treasury bill yields may have also encouraged some investors to reconsider their allocation to equities. According to Bangladesh Bank data, the compounded rate on 91-day Treasury bills fell from 9.46% on 8 September to 9.32% on 16 September.

However, market participants do not see the decline in yields as a standalone explanation for the recent rally.

The breadth of the market has also improved significantly. On 15 September, 336 issues advanced, followed by 179 on 16 September and 259 on 17 September. The pattern suggests that the recent recovery has involved a wider range of stocks across different sectors.

Eastern Bank, Sharp Industries and IPDC Finance were the most actively traded stocks on Sunday.

Khan Brothers PP Woven Bag Industries topped the gainers' list, rising 9.88%, followed by ICB AMCL Sonali Bank First Mutual Fund, up 9.86%, and Prime Finance First Mutual Fund, which gained 9.75%.

Paramount Textile led the decliners, falling 4.31%. Rahima Food Corporation and Desh Garments each declined 2.88%.

The Chittagong Stock Exchange also closed higher. The CASPI gained 120 points to 14,856, while the CSCX advanced 85 points to 9,107. Turnover on the CSE stood at Tk10.10 crore.

The recent rally, however, will need to sustain higher turnover and broad-based participation to demonstrate whether the market's recovery can continue. Investors will also be watching corporate earnings, gas supply conditions and the persistence of investor confidence in the coming sessions.

EBL Securities said strong investor participation and broad-based accumulation had brought the benchmark index close to the 5,600 mark following its recent declines, although geopolitical and other market risks remained.

The government has increased the retail prices of diesel, octane, petrol, and kerosene by Tk20 per litre, with the revised rates set to take effect from Monday (21 September).

With the new price adjustment, this is the second time the BNP government has hiked fuel prices after assuming power in February this year. The last price hike was back in April.

Under the revised rates, the price of diesel has been raised to Tk135 per litre from Tk115, marking an increase of Tk20, or 17.4%.

The price of octane has been increased to Tk165 from Tk145, also a Tk20 hike, equivalent to 13.8%.

The price of petrol has been raised to Tk160 per litre from Tk140, an increase of Tk20, or 14.3%.

Meanwhile, from tomorrow, kerosene will cost Tk155 per litre, up from Tk135, marking a Tk20, or 14.8%, increase.

The Energy and Mineral Resources Division issued a gazette notification on Saturday night (20 September), revising the consumer-level selling prices of the four petroleum products.

Why the hikes

Laying out the perspective and rationale of the latest fuel price hike, the energy division said, "The ongoing war in the Middle East has caused a significant increase in the international prices of all types of petroleum products and freight charges since March 2026, and the upward trend continues."

Although international fuel prices have more than doubled, the government refrained from increasing domestic fuel prices in the public interest since April. As a result, the Bangladesh Petroleum Corporation (BPC) incurred losses of approximately Tk22,875.66 crore between March and August this year.

On 18 April, the government had increased the price of diesel by Tk15 per litre to Tk115. Despite the abnormal rise in international prices, domestic fuel prices remained unchanged for the following five months. Fuel prices in neighbouring and other Asian countries are currently considerably higher than in Bangladesh, said the energy division.

Giving a comparative price-sensitive analysis with India and other Asian countries, it said diesel is priced at Tk134.76 per litre in Kolkata, India; Tk164.83 in Myanmar; Tk161.24 in Nepal; Tk179.42 in Sri Lanka; Tk151.22 in Thailand; Tk137 in Vietnam; Tk140.71 in the Maldives; Tk168.53 in the Philippines; Tk185.48 in Pakistan; and Tk144.79 in the United Arab Emirates.

"The relatively low domestic fuel prices have created a risk of fuel being smuggled to neighbouring countries. The smuggling of petroleum products purchased with foreign currency earned through the hard work of Bangladeshi expatriates is not acceptable," said the division.

The government is also providing substantial subsidies to keep electricity and gas supplies uninterrupted amid the impact of the war on the LNG market.

In this context, the energy division said there is no alternative to increasing fuel prices to sustain the government's social safety net programmes and prevent fuel smuggling.

At current international market prices, BPC is incurring a loss of approximately Tk89 per litre on diesel. This translates into a daily loss of around Tk109 crore. At this rate, the annual loss on diesel alone would reach approximately Tk40,000 crore.

According to the energy division, increasing domestic fuel prices by Tk20 per litre, in line with prices in neighbouring countries, would reduce BPC's annual losses by around Tk10,000 crore.

Against this backdrop, the division said it has revised the prices of petroleum products to reduce BPC's losses, save foreign currency, and mitigate the risk of fuel smuggling to neighbouring countries amid the rise in international fuel prices caused by the ongoing war in the Middle East.

Fears of wider economic pressure

Talking to The Business Standard tonight, Dr Fahmida Khatun, distinguished fellow at the Centre for Policy Dialogue (CPD), said that the latest price increase seems to be another adjustment to a continuing external energy-price shock.

"Nevertheless, increasing all major petroleum prices by the same absolute amount at once is a substantial policy intervention, especially when inflation and household financial pressure are already high," she said in her immediate reaction.

"The increase will have wide-ranging consequences. Individuals will face higher expenses for transportation. Even households that do not purchase fuel directly will be affected as transportation costs raise the prices of food and other essentials.

"Poor and lower-middle-income families will suffer disproportionately because most of their income is spent on daily necessities," she added.

Fahmida continued, "Diesel-dependent agriculture will face higher irrigation, mechanisation and transportation costs. This could potentially raise food prices, but reduce farmers' returns."

Around 70% of the country's irrigation pumps are operated using diesel. A research paper published by researchers from Bangladesh Agricultural University (BAU) and the Bangladesh Rice Research Institute (BRRI) found that irrigation is one of the major components of the total input or production costs for Boro rice, accounting for 20–25% of the total expenditure.

Fahmida also said, "Industries will incur higher logistics and generator costs, which will weaken profitability and export competitiveness. Small businesses will be especially vulnerable.

"At the macroeconomic level, the increase may intensify inflation, reduce household consumption and weaken growth."

Since the government had no other option but to increase energy prices, it should monitor how this increased price is imposed on the common people by market players, the economist stressed.

"The government should publish the price calculation transparently, prevent excessive fare increases and market manipulation. The government should also provide targeted support to low-income households, small farmers and public transport users," she added.

Anwar-ul Alam Chowdhury Parvez, president of the Bangladesh Chamber of Industries, told TBS, "The country is experiencing high inflation that is not coming under control. Industries are not getting adequate gas and electricity, resulting in very low private-sector credit growth.

"At such a time, increasing fuel prices by more than 15% without consulting anyone will create additional pressure across all sectors."

He said the decision will increase industrial production costs, transportation costs, and inflation. "The prices of goods will become uncontrollable. People will lose their jobs, while many businesses will have to scale back their operations.

"Non-performing loans in banks will increase. The government will not be able to create the employment it has been promising," he opined.

He feared that such decisions by the government will erode public confidence in the BNP administration. "Overall, it will create a socioeconomic crisis."

Talking to TBS, former Dhaka Chamber of Commerce & Industry (DCCI) president Shams Mahmud said, "As it is, all forms of business activities, including manufacturing, logistics, agro, service sector, and FMCG [fast-moving consumer goods], are going through stress in these turbulent times. International energy markets have recently been affected by the strikes in Saudi Arabia by Houthi rebels. Just today, Saudi Arabia said next month's shipment of oil to Europe will be withheld.

"So we can anticipate future price increases. The government has taken the right decision as a policy to create a buffer for any price shock, especially in regards to sourcing and also subsidy."

"But unfortunately, this will add a burden to the business ecosystem of Bangladesh, with inflationary pressure on the internal economy reducing disposable income. For export-oriented industries, which are already in a vulnerable state with decreasing competitiveness, it will add to the already increasing cost of doing business," said the businessman.

Also, the International Monetary Fund has been pressuring the government for a reduction of subsidy, and it may also have had an influence on the decision, as both parties will sit in Bangkok next month to work out the next loan from the global lender, he added.

About 1.81 crore people in Bangladesh are projected to face high levels of acute food insecurity between September and December 2026, according to a report by the Food and Agriculture Organization (FAO) released this month.

The UN agency categorised the level of food insecurity in Bangladesh as IPC Phase 3 (crisis) and above -- under the Integrated Food Security Phase Classification (IPC), a standardised global scale used to measure the severity of food crises.

IPC Phase 3 is the threshold at which populations experience critical levels of acute food insecurity and malnutrition, requiring urgent intervention.

The FAO said the projected number of people facing acute food insecurity is 18 percent higher than the estimated 1.53 crore people during May-August this year.

The projection includes approximately 7.87 lakh people expected to experience IPC Phase 4, or emergency-level acute food insecurity, under the IPC framework.

“The deterioration in food security conditions is mainly due to constrained household purchasing power amid persistently high inflation, driven by elevated fuel and energy costs associated with disruptions in the Strait of Hormuz, while floods further affected livelihoods in some areas,” the FAO said in its Bangladesh country brief.

Bangladesh has been facing persistent inflation since fiscal year 2022-23. The 12-month average inflation rate rose to 10.13 percent in June 2025, the highest since FY12. In August 2026, consumer price inflation moderated to 8.26 percent, while the 12-month average inflation rate stood at 8.66 percent, according to the Bangladesh Bureau of Statistics (BBS).

According to the IPC, food security conditions are projected to worsen in Satkhira, Bagerhat, Barishal, Barguna, Bhola, Jhalokathi, Noakhali, Khagrachhari, Rangamati, Bandarban and Cox’s Bazar.

Gaibandha, Kurigram, Jamalpur, Sirajganj, Netrokona and Sunamganj are also identified as districts where people face acute food insecurity.

The FAO report said food security conditions remain of particular concern for approximately 12 lakh forcibly displaced Myanmar nationals residing in Cox’s Bazar and Bhasan Char.

Thirty-five percent of this refugee population is projected to face acute food insecurity between September and December, including 10 percent facing emergency-level acute food insecurity amid anticipated funding shortfalls for food assistance and limited livelihood opportunities.

Despite the increased risk of food insecurity, the UN agency forecast Bangladesh’s aggregate paddy output for 2026 at 6.19 crore tonnes, roughly 5 percent above the four-year average of 5.95 crore tonnes.

The FAO said the 2026 Boro paddy crop, which accounts for about 55 percent of annual output, yielded an estimated 3.19 crore tonnes, close to the previous year’s record level, supported by improved seed varieties.

The Aus harvest concluded in July at 41 lakh tonnes despite crop losses caused by flooding from May to July in Chattogram, Cox’s Bazar, Moulvibazar and Habiganj. The vegetative Aman crop is preliminarily forecast at 2.59 crore tonnes, it said.

As domestic production is forecast to rise, the FAO expects Bangladesh’s rice imports to decline sharply. Rice imports for calendar year 2026 are forecast to fall to 8 lakh tonnes from 19 lakh tonnes in 2025, it said.

The National Board of Revenue (NBR) is set to procure a three-year subscription to S&P Global Platts, a global provider of commodity price assessments and market data, to help customs officials verify the declared prices of imported goods.

The Ministry of Finance has recently approved the procurement at a cost of around Tk 8 crore, according to revenue officials familiar with the matter.

The subscription is being procured through the Direct Purchase Method (DPM) and is likely to be purchased within this week, several members of the purchase committee told The Daily Star.

The database will provide international market prices for thousands of commodities, allowing the NBR to compare importers’ declared values with prevailing prices when determining customs values.

Officials said the board had contacted several other international platforms, including the London Metal Exchange (LME), Shanghai Metals Market (SMM) and ICIS, before settling on Platts.

The other platforms do not provide data covering all types of products, while Platts offers price assessments across a broader range of commodities, they said.

“We negotiated with Platts several times before finalising the price,” a member of the purchase committee said on condition of anonymity.

The subscription will provide access to data on various products, while the NBR will receive at least 20-30 user IDs, allowing officials of customs houses across the country to access the platform.

The move follows a meeting on customs valuation held at Chattogram port on August 11 in the presence of Finance and Planning Minister Amir Khosru Mahmud Chowdhury.

At the meeting, Chattogram Chamber of Commerce and Industry (CCCI) President Mohammed Amirul Haque said customs officials sometimes assess imported goods at values higher than their actual purchase or invoice prices.

He cited plastic chips as an example, saying importers purchased the product at $8,000-$9,000 per tonne, while customs assessed its value at $12,000 per tonne for calculating duties and taxes.

Other businesses at the meeting also complained that higher customs valuations than their actual purchase prices were increasing import costs and putting additional pressure on consumers.

Following the meeting, the finance minister instructed the NBR chairman and the commissioner of Chattogram Customs House to take steps on the issue by September.

Md Mahbubur Rahman, commissioner of Chattogram Customs House, told The Daily Star that customs officials already use information from international price platforms and websites in some cases to assess imported goods.

“But as we do not have subscriptions, we do not have full access to such information and cannot properly verify the data provided by importers,” he said.

“Having access to international price databases will make it easier to verify the declared values submitted by importers and assess customs value based on prevailing market prices,” Mahbubur said.

Ahmedur Reza Chowdhury, deputy commissioner of Chattogram Customs House and a member of the purchase committee, said the database also provides country- and region-specific market data.

“If data for a particular country is not available, we can consider data from a neighbouring or comparable market. Under the customs valuation rules, such information can be useful in determining the value of identical or similar goods from the same or comparable regions,” he said.

Platts publishes daily commodity price assessments and benchmarks covering markets such as crude oil, refined fuels, gas, LNG, chemicals, petrochemicals, fertilisers, agriculture, metals and shipping. S&P Global says its Platts business publishes more than 15,000 commodity prices daily across these markets.

The proposed subscription comes amid longstanding complaints from importers that customs authorities sometimes determine the assessable value of goods above their actual transaction or invoice prices, said CCCI President Haque.

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.

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.

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 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.

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.

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.

The Dhaka Stock Exchange (DSE) extended its recovery for a third consecutive session today (17 September), with the benchmark DSEX rising above the 5,500-point mark amid broad-based buying across major sectors.

Investors remained active despite ongoing geopolitical tensions in the Gulf region, while assurances of improved gas supplies to industrial hubs appeared to boost market sentiment.

The DSEX gained 38.1 points, or 0.69%, to close at 5,532 compared with 5,494 in the previous session, according to DSE data. The other two major indices also advanced. The Shariah-based DSES rose 7 points, while the blue-chip DS30 gained 8 points.

Meanwhile, market turnover surged nearly 18% to Tk655 crore, while market capitalisation increased by more than Tk3,257 crores to Tk6.92 lakh crore, according to DSE data.

Market breadth was positive, with 67% of the traded stocks advancing. A total of 80 issues declined, while 47 remained unchanged.

Driven by rising indices and positive market breadth, stocks advanced in three of the five trading sessions during the week.

The DSEX posted a net gain of 17 points over the week, gaining 153 points in three sessions against a cumulative loss of 136 points in the other two.

EBL Securities in its daily market commentary said, the benchmark index of the capital bourse closed the week with sustained recovery momentum for a third consecutive session, as investors' strong buying appetite defied concerns over the market's near-term trajectory stemming from geopolitical tensions in the Gulf region, while signs of improving domestic gas supply to industrial areas provided some relief to investor sentiment.

"Market momentum remained firmly positive throughout the session despite mild pullbacks in the first hour from sellers, while a sustained broad based buying interest continued to reinforce the prevailing upward trend, it said.

On the sectoral front, Textile sector stocks accounted for the highest share by 26.3% of turnover, followed by General Insurance by 14.9% and Bank 12.4%.

Sectors mostly displayed positive returns, where Mutual Fund by 3.6%, General Insurance by 3% and Cement 1.9% exhibited the most gains, while only Travel exhibited the marginal corrections on the bourse today.

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.

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.

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.

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.