The Bangladesh Securities and Exchange Commission (BSEC) has unveiled an ambitious roadmap to rescue the country's capital market from a decade of stagnation, promising to dismantle the "analog" hurdles of the "paper age" and transition into a technology-driven institutional powerhouse.

Speaking at an open discussion titled "The Current State of the Bangladesh Capital Market and Way Forward", organised by the DSE Brokers Association of Bangladesh (DBA) at DSE Tower today (31 August), BSEC Chairman Masud Khan outlined a "Mega Plan" featuring digital share trading, T+1 settlement, AI-powered surveillance and mandatory market participation for large companies.

He identified the "IPO drought", liquidity crunch and lack of investor confidence as the major challenges facing the market, and said the regulator aims to shift it from a "retail-dominated, rumor-based" environment to one driven by professional analysis and valuation.

Masud, who has 46 years of corporate leadership experience, said the current government is perhaps the most market-friendly in Bangladesh's history. He cited the FY2026-27 budget's market-oriented measures, particularly the treatment of the 15% tax on individual dividend income as a "final tax liability".

He said such structural changes are needed to encourage informed investment rather than herd behaviour.

Reflecting on his first two months at the regulator, Masud said the removal of the floor price on his second day in office was a pivotal step towards restoring free-market dynamics.

He said MSCI (Morgan Stanley Capital International) has decided to resume publishing the Bangladesh Index from November, while the resolution of Beximco Pharmaceuticals' GDR listing issue on the London Stock Exchange within a month of his tenure has helped restore the country's international credibility and could encourage other large local companies to pursue global listings.

Trading to go fully digital

Masud described the current system of using physical documents for buy and sell orders as a "horror story", saying it creates scope for signature forgery and fund misappropriation.

He said BSEC will introduce digital order placement through mobile apps, bringing the process in line with global practices.

The regulator will also digitise its internal file management and adopt IAS 34 to allow "condensed" quarterly reporting, which Masud said would reduce excessive regulatory queries to listed companies.

Easier IPO, direct listing

Addressing the IPO drought that has persisted since 2024, Masud said the existing public-issue rules are discouraging entrepreneurs from entering the capital market.

He said BSEC is overhauling direct-listing rules, previously restricted to government companies, to allow all companies, including large multinationals and profitable local firms, to list directly.

The mandatory offloading requirement will also be reduced from 25% to 10%. BSEC is additionally planning a "hybrid" capital-raising model combining IPO and direct listing, which Masud said could be approved within seven days for fundamentally strong companies.

To further institutionalise the market, BSEC is formulating rules to bring "Public Interest Entities" (PIEs) into the capital market. The category would cover companies using Tk300 crore or more in public funds through equity or bank loans.

Masud also indicated that a new law could require major multinational branches, including Standard Chartered and HSBC, to register as local companies and eventually list on the stock exchange.

T+1 settlement, AI surveillance

BSEC is moving towards a T+1 settlement cycle, with a long-term goal of T+0, or same-day settlement.

Masud said he is in discussions with Bangladesh Bank to extend Real-Time Gross Settlement (RTGS) hours to facilitate the cash side of stock transactions.

He has also given the Dhaka Stock Exchange (DSE) one year to shift its surveillance department to an AI-based automated system. The system would use automatic triggers to detect and halt suspicious trading, reducing human intervention and potential bias, he said.

Masud called on market stakeholders to support the reforms, saying BSEC would not intervene in price levels but would remain focused on ensuring a fair, transparent and internationally compliant market.

DSE cuts bond listing fees

DSE Managing Director Nuzhat Anwar and Chairman Mominul Islam expressed support for coordinated reforms.

Mominul said the DSE board had reduced listing fees for bonds by up to 80% to encourage fixed-income trading on the main board.

He also said the DSE is working to resolve the long-standing issue of investors whose funds are trapped in closed brokerage houses, estimating that 95% of affected investors would be repaid in full by the end of this year.

Meanwhile, Riad Mahmud, president of the Bangladesh Association of Publicly Listed Companies (BAPLC), urged BSEC to act as a "vanguard" for listed companies.

He said the worsening energy crisis is now a direct threat to industrial survival and called for BSEC and Bangladesh Bank to work together to ensure listed companies receive priority in working-capital financing to protect production and jobs.

He also urged the regulator to remove legal barriers preventing stronger corporate groups from taking over sick or non-operational listed companies.

Bangladesh Bank (BB) is introducing a comprehensive electronic Foreign Exchange (FX) Market Module to automate and streamline foreign exchange intervention auctions, interbank FX transactions and the collection of market data for the preparation of the reference exchange rate.Market Research Reports

According to the Operational Guidelines on the FX Market Module, the system is designed to improve efficiency, transparency, accuracy and regulatory oversight in the country’s foreign exchange market.

The module will automate the entire FX intervention process, including auction management, bid submission and evaluation, allocation, reporting and record-keeping. Bangladesh Bank may conduct FX buying or selling auctions when required as part of its market intervention operations.

Under the system, Bangladesh Bank will publish auction notices specifying the auction amount, date and time, transaction type, eligible participants and other applicable requirements. Authorised Dealer (AD) banks will then submit their bids electronically within the prescribed cut-off time.

The system will also operate as a centralised electronic dealing platform for interbank FX transactions among AD banks.

Spot, Forward and Swap transactions will be conducted through the platform, with trade confirmation, transaction monitoring, reporting, audit trails and record management incorporated into the system.Bangladesh Trade Data

For Spot transactions, the settlement cycle may be up to T+2, while Forward transactions will be settled according to the specified tenor. Swap transactions will consist of two legs-a spot transaction and a forward transaction, or vice versa-with separate settlement procedures for the near and far legs.

The guidelines provide separate responsibilities for Front Office, Mid Office and Back Office users of AD banks.

Front Office users will create and accept FX deals and submit or authorise auction bids, while Mid Office users will administer user IDs and dealer limits. Back Office users will handle foreign currency and taka settlement as well as reporting.

The new system will also support preparation and publication of the official FX Reference Rate (RR).

AD banks will submit standardised client-level data on export, import and remittance transactions, which will be used to calculate the reference rate for the foreign exchange market.

Under the guidelines, AD banks will have to submit client-level FX transaction data three times on each business day.

Data covering transactions up to 11:00am must be submitted by 11:30am, while data up to 4:00pm must be submitted by 4:30pm. Transactions conducted after 4:00pm may be reported by 11:00am on the following working day.

Even if there is no reportable FX transaction during a reporting period, banks will have to submit a “Null Report”.Business News Portal

Transactions equivalent to US$100,000 or above are required for construction of the reference rate, while wage-earner remittance transactions must be reported regardless of their size.

The guidelines say AD banks will be able to submit client-level data either through a prescribed Excel file or by entering individual transactions directly into the system.

Submitted data will be subject to approval by designated Checker users, creating a maker-checker mechanism for the reporting process.

The electronic platform is expected to reduce manual intervention and processing time while strengthening transparency and standardisation in Bangladesh’s foreign exchange market.

The Bangladesh Securities and Exchange Commission (BSEC) is planning to frame a regulation to bring certain “public interest companies” to the stock market under the Securities Act, said its Chairman Masud Khan yesterday.

He made the remarks as chief guest at an open discussion on the current state of the capital market, organised by the DSE Brokers Association of Bangladesh (DBA) at the DSE’s multipurpose hall in Dhaka.

Under the Securities Act, the stock market regulator has the authority to direct any company to list in the public interest, Masud said.

He said the commission now plans to define what qualifies as a “public interest company” and frame rules under the existing provision. “Those companies falling under certain categories will have to apply.”

The move is aimed at bringing eligible companies to the market rather than relying solely on voluntary listing decisions, according to the BSEC chief.

He said the commission expects direct listing, a revamped initial public offering (IPO) process and a hybrid listing mechanism to encourage more good companies to get listed.

The direct listing regulation will be made public for feedback within days, while the IPO rules will be made public within a few months, he said.

Noting that the IPO process currently takes too long, Masud said companies are required to submit documents to both the Dhaka Stock Exchange (DSE) and the BSEC.

He explained that assessments by both agencies lead to a prolonged listing process, which can sometimes take a year to a year and a half. “This is how the patient dies.”

To address this, the BSEC is proposing an extended audit under the new IPO rules, the BSEC chief said. The audit would go beyond a conventional statutory audit, verifying whether a company’s assets, land titles, receivables and liabilities actually exist.

Under the proposed system, auditors would certify financial statements as “true and fair”, after which the DSE would not raise further questions about those statements. The exchange would instead assess whether the company’s business model is viable.

“From now on, issuing companies will submit IPO applications to DSE or Chittagong Stock Exchange and give us a copy,” Masud said. “We at BSEC will not ask any questions. All questions will go to DSE or CSE.”

He said several large companies are already showing interest in listing through direct listing.

The hybrid mechanism is also expected to be introduced within a week, he said. Under it, a company would be able to offload some shares through direct listing and some through an IPO.

Beyond listing reforms, the BSEC and DSE have taken steps to develop the bond market, including cutting trading fees, he added.

Also speaking at the event, Md Mominul Islam, chairman of the DSE, said the stock exchange had already decided to reduce bond listing fees and other fees by around 80 percent to revamp the corporate bond market.

He also said the bourse is working on returning client funds stuck at several brokerage houses.

Thousands of investors have fallen victim to embezzlement at several brokerage firms over the past five years, The Daily Star has reported previously.

Nearly a dozen brokerage houses have reportedly embezzled hundreds of crores of taka over the last few years.

Four brokerage houses -- Moshihor Securities, Banco Securities, Crest Securities and Tamha Securities -- collectively embezzled around Tk 270 crore since 2020, according to the BSEC.

Earlier in May this year, the regulator fined four firms -- NBL Securities, Gibson Securities, UCB Stock Brokerage and Khulna Printing & Packaging -- and several of their officials Tk 1.09 crore for securities law violations and fraud in the stock market.

Later in June, a BSEC probe found that brokerage firm Salta Capital had embezzled around Tk 100 crore in client funds and shares.

Several brokers at the event called for bringing good companies to the market, simplifying the listing process, and ensuring greater transparency and accountability.

They also said the exchange should not issue notices over large buy orders from a single brokerage house, but should instead examine whether brokerage houses are conducting repeated trades to influence the index.

The government’s net borrowing from the banking system stood at Tk 165,538 crore in fiscal year (FY) 2025-26, far exceeding its plan for the year amid falling foreign financing and lower-than-expected revenue collection, according to Bangladesh Bank (BB) data.

At the beginning of FY26, the government planned to borrow Tk 104,000 crore. It later revised its borrowing plan upward to Tk 118,000 crore for the year but ended up borrowing an additional Tk 47,538 crore.

At the end of June 2026, credit to the public sector grew 30 percent, while credit growth to the private sector increased by 4.47 percent, according to BB data.

Two analysts have raised the alarm, warning that increased government borrowing could crowd out loans for the private sector and undermine economic stability and its gradual recovery.

“Persistent government borrowing creates two forms of crowding out,” said Ashikur Rahman, principal economist at the Policy Research Institute (PRI) of Bangladesh.

He said the immediate pressure from high government borrowing from the banking system may appear limited because aggregate liquidity remains comfortable and private credit growth is already weak.

“However, banks have a strong incentive to invest in relatively safe government securities rather than finance productive but riskier private activity. If investment demand recovers, continued government borrowing will place upward pressure on interest rates and restrict credit, particularly for SMEs, working capital and new investment,” he said.

“It will also crowd development priorities out of the budget,” Ashik said, adding that since salaries, subsidies and interest payments are difficult to reduce, development expenditure and the quality of Annual Development Programme implementation will probably bear much of the adjustment.

“Unless revenue mobilisation improves dramatically, the government will again have to exceed its borrowing target, accumulate arrears or compress expenditure.”

The BB, in its monthly report on major economic indicators, said that in FY26 the National Board of Revenue (NBR), which collects roughly 86 percent of total annual revenue, recorded 12 percent year-on-year growth in tax collection, a significant leap from 2.23 percent growth registered the previous year.

Revenue still lagged behind expectations, reaching only 82.60 percent of the government’s target, it added.

FY26 was the 10th year in a row that the NBR missed the government’s revised annual collection target. The tax authority collected Tk 415,500 crore, falling Tk 88,000 crore short of the revised goal for the fiscal year, according to provisional data.

“Consequently, the government progressively relied more on borrowing to finance its deficit. Specifically, deficit financing was primarily sourced from domestic sources, with the banking system accounting for the major share of net domestic borrowing in FY26,” the BB report said.

Towfiqul Islam Khan, additional director, research at the Centre for Policy Dialogue (CPD), said the substantial revenue shortfall is now evident, as is the extent to which bank borrowing overshot the target.

“Together, these outcomes highlight a noteworthy absence of fiscal discipline.”

For the current FY27, the NBR has been given a target of Tk 604,000 crore to finance the Tk 938,000 crore budget. The tax target is 45 percent higher than the actual collection in FY26, and it would be highly challenging for the NBR amid a slowdown in the economy.

Of the deficit estimated at Tk 243,000 crore, the government plans to borrow Tk 127,000 crore from domestic sources, with Tk 112,000 crore coming from the banking sector.

The continued high borrowing from the banking sector, Ashik said, has created a broader concern of “a growing fiscal-monetary contradiction”.

“Bangladesh Bank cannot sustainably reduce inflation and revive productive credit while fiscal policy continues to absorb a disproportionate share of banking resources. The inflationary risk would become greater if the central bank were ultimately required to accommodate this borrowing through additional liquidity,” he warned.

MA Razzaque, chairman of Research and Policy Integration for Development (RAPID), said the government has already stretched expenditure well beyond what its current revenue capacity can comfortably support.

“The pressure could intensify if expected foreign financing falls short, particularly as the FY27 budget appears to assume an ambitious level of external assistance.”

In FY26, net foreign financing decreased by 20 percent year-on-year, according to the BB.

In July, Bangladesh received $180 million in foreign loans, down from the amount received in the same month of the previous year. But it repaid $453 million in principal and interest to foreign creditors.

Razzaque said the government is taking on more and more spending commitments. A new pay scale, the Family Card Programme, support for business activity, help for financially troubled banks, and higher development spending will all require money.

“But revenue is not growing fast enough, there has been little serious effort to cut or rationalise spending, and foreign aid is also likely to fall short. That makes bank borrowing the easy, sometimes seemingly the only, option, but for Bangladesh now it is an option we can increasingly ill afford.”

He said crowding out has so far been masked by exceptionally weak private-sector credit demand. “With businesses borrowing and investing less, heavy government borrowing has not yet created acute competition for bank funds,” he said.

“But as economic activity strengthens and private credit demand recovers, continued high government borrowing could begin to constrain financing available to firms and raise borrowing costs.”

Bangladesh will get a small benefit in garment exports to the US as its effective final tariff rate is slightly lower than those faced by China and Vietnam, two major competitors in the global apparel supply chain.

The US on July 24 imposed a new 10 percent duty on exports from Bangladesh to the American market, citing imports of goods produced with forced labour. With that, the country’s effective tariff rate now stands at 25.6 percent.

Meanwhile, China currently faces an effective tariff of 35.6 percent on garment exports to the US, including the 7.5 percent surcharge imposed in 2020, while Vietnam faces a rate of 28.1 percent.

An effective tariff rate is the overall import duty after taking into account all applicable US tariffs and surcharges on a product.

India, Indonesia, Pakistan and Cambodia face the same 25.6 percent duty as Bangladesh, according to data from the Tariffs Tool, a resource for estimating US import duties and understanding the tariff landscape.

The tariff rates were verified by Research and Policy Integration for Development (RAPID), a research organisation based in Dhaka.

While the lower rate compared with China and Vietnam gives Bangladesh a competitive advantage, local garment exporters and economists say the benefit may be limited because the difference is not large and other factors, such as the ongoing energy crisis, are affecting production and shipments.

AK Azad, chairman of Ha-Meem Group, which ships the majority of its garments to the US, said the lower effective tariff rate could benefit Bangladesh, although the domestic energy crisis is affecting production.

Azad said that US retailers are not considering the duty but are instead asking for timely shipment of goods as production at industrial units is being affected.

“The government should resolve the energy crisis soon so that the local exporters can enjoy the benefit of lower rate to the American market,” he added.

MA Razzaque, chairman of RAPID, said that US tariff policy remains uncertain as the current US administration changes the rates frequently.

“Moreover, the difference in tariffs on Bangladesh compared with China and Vietnam is not too much. So, Bangladesh may not benefit much from the lower tariff rate compared to its key competitors in the US market,” he said.

“Overall, the tariff has been increased, and this is the fact,” he said, adding that because of the increase, US buyers would either reduce the price of garments or ask local suppliers to share part of the additional 10 percent duty imposed recently.

Razzaque said China has created some connector destinations such as Vietnam and Mexico through which it can do good business by producing garments and shipping them to the US. Bangladesh has no such connector destinations yet.

“But it is true that numerically, Bangladesh’s tariff is lower than China and Vietnam, which matters less now,” he said.

However, Inamul Haq Khan, senior vice-president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), is hopeful that Bangladesh will benefit from the lower tariff.

Garment exports from Bangladesh to the US totalled $4.01 billion in the January-June period of this year, down 5.75 percent year-on-year, according to data from the Export Promotion Bureau.

Inamul said that although shipments to the American market are gradually rebounding recently, Bangladesh’s garment exports to the US might not increase much because of the lower rate.

He also said the energy crisis has been affecting production significantly.

Mohiuddin Rubel, founder and CEO of Bangladesh Apparel Voice, said buyers look at the total landed cost of garments rather than tariffs alone.

“The rate advantage only becomes a lasting one when we manage our capabilities better than competitors,” he said.

That means securing adequate energy, ensuring efficient port handling and keeping other costs under control, he added.

“Bangladesh also needed to shift towards non-cotton products and make use of its clean record,” he said.

Business leaders have called for sector-specific action plans to help industries prepare for Bangladesh’s graduation from the least developed country (LDC) category.

They said businesses urgently need to improve productivity, skills, technology, access to finance and trade capacity to remain competitive in global markets.

They also stressed that the plans should be based on reliable data, properly implemented and regularly monitored. Greater private sector participation is also needed in government reform efforts.

The recommendations came at a discussion organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at its Motijheel office yesterday on private sector participation in LDC-related reforms and strengthening business capacity.

FBCCI Administrator Md Fazlul Hoque chaired the meeting. FBCCI Secretary General Md Alamgir presented a report on the challenges and opportunities Bangladesh may face after graduating from the LDC category.

The report warned that Bangladesh could lose preferential market access in major export destinations, including duty-free benefits under the European Union’s Generalised Scheme of Preferences (GSP) and Everything But Arms (EBA) scheme.

The pharmaceutical and other sectors may also face stricter intellectual property requirements, it said. The report called for greater private sector involvement in designing and implementing reforms to ensure a smooth transition.

TRADE SKILLS, IP RIGHTS KEY CONCERNS

Rajib H Chowdhury, senior vice-president of the Dhaka Chamber of Commerce and Industry, said Bangladesh needs stronger capacity to negotiate trade agreements and deal with emerging market-access challenges.

“We do not have enough negotiation capacity. We need to improve it,” he said.

KSM Mostafizur Rahman, president of the Bangladesh Agrochemical Manufacturers Association, said intellectual property rights would be a major challenge for several industries after graduation.

The pharmaceutical, agriculture and agro-chemical sectors could be particularly vulnerable, he said.

Shamim Ahmed, president of the Bangladesh Plastic Goods Manufacturers and Exporters Association, said much of the domestic plastic industry still relies on copying existing products.

This could make intellectual property rights a major challenge for the sector after graduation, just as they are expected to be for the pharmaceutical industry, he said.

Md Munir Chowdhury, national trade expert of the Bangladesh Regional Connectivity Project-1 under the Ministry of Commerce, said businesses should clearly identify the challenges facing their respective sectors.

Ismat Zerin Khan, president of the Patuakhali Women Chamber of Commerce and Industry, said the LDC graduation strategy should also cover businesses outside Dhaka.

Fazlul Hoque urged all district chambers and sector-based associations to submit their specific recommendations to the FBCCI in writing. The federation will review the proposals and present them to policymakers, he said.

He said Bangladesh must make effective use of the additional three years to prepare for graduation.

“If we can strengthen the capacity of the private sector, our competitiveness in international markets will also improve,” he said, seeking cooperation from district chambers and sector-based associations.

Bangladesh is scheduled to graduate from the UN’s LDC category on November 24, 2026. Although the country meets all three graduation criteria, the government has sought a three-year extension until November 2029 to address economic challenges and complete reforms.
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The UN Committee for Development Policy (CDP) has backed a shorter extension, while the UN Economic and Social Council (ECOSOC) has forwarded Bangladesh’s request to the UN General Assembly, which will make the final decision before the graduation deadline.

The Bangladesh Financial Intelligence Unit (BFIU) has decided to form an inter-agency steering committee involving public and private sector stakeholders to strengthen efforts to prevent trade-based money laundering (TBML).

The decision was taken at a meeting organised by the BFIU on Sunday with representatives of relevant government agencies and 15 scheduled banks, according to a press release.

The proposed committee will identify TBML risks, improve information sharing and inter-agency coordination, and support investigations into suspected cases.

Representatives of the BFIU, Bangladesh Bank's Foreign Exchange Policy Department and Foreign Exchange Operation Department, the National Board of Revenue's Central Intelligence Cell and Customs Intelligence and Investigation Directorate, several customs houses, the Criminal Investigation Department, Anti-Corruption Commission and 15 scheduled banks attended the meeting.

Participants shared their experiences and discussed existing challenges, emerging risks and measures needed to curb TBML. They observed that TBML techniques are becoming increasingly complex and evolving continuously, underscoring the need for coordinated action, effective information-sharing mechanisms and stronger risk-analysis frameworks.

The meeting stressed closer cooperation among regulatory and law enforcement agencies, scheduled banks, customs authorities and other private-sector stakeholders, alongside institution-specific monitoring.

The proposed steering committee will review existing risks and challenges, assess ongoing measures, strengthen information-sharing mechanisms and determine future actions. It will also hold regular meetings to review the activities of relevant agencies and provide necessary guidance, the BFIU said.

The financial intelligence agency expects the committee to improve the identification of potential TBML activities, monitoring of suspicious transactions, analysis of relevant information and coordination of investigations.

The government has kept retail prices of diesel, octane, petrol and kerosene unchanged for September, according to a notification issued today (31 August).

Under the existing pricing structure, diesel will continue to sell at Tk115 per litre, octane at Tk145, petrol at Tk140 and kerosene at Tk135.

The Energy and Mineral Resources Division said the prices approved by the authorities will remain effective throughout September, starting from 1 September.

The current prices were set through a notification issued by the division on 31 May 2026.

The latest decision was taken following a proposal from Bangladesh Petroleum Corporation (BPC) submitted on 25 August.

Oil prices rose more than 3.5 percent on Monday after the US attacked an Iranian island in the Strait of Hormuz and Tehran said it had retaliated, as their conflict extended into its sixth month.

Brent crude futures were up $3.15, or 3.58 percent, to $91.25 a barrel at 0903 GMT, while US West Texas Intermediate crude was up $2.96, or 3.55 percent, to $86.36.

US forces struck two launchers on Iran’s Larak Island in the Strait of Hormuz on Sunday, the first known American strikes on the country since late July.

In response, Iran attacked two US air bases in Jordan, Iranian media reported on Monday, citing Iran’s Revolutionary Guards.

“Renewed military strikes in the Middle East and concerns of further oil supply disruptions have lifted oil prices,” said UBS analyst Giovanni Staunovo, adding that markets will now focus on whether the situation de-escalates or not.

US President Donald Trump said in a social media post on Sunday that Iran’s energy hub of Kharg Island was being “blown to smithereens”, but there was no evidence the island was under attack.

The post, which included an AI-generated video, provided no further details. Iran denied any attack on the island and said oil operations were continuing.

Efforts to negotiate an end to the conflict remain stalled as mediators seek to reopen the Strait of Hormuz, through which a fifth of global oil supplies passed before the war began at the end of February.

Part of the sharp market reaction reflected thin trading volumes due to a UK public holiday, said Saxo Bank analyst Ole Hansen.

Shipping data showed the number of visible commodity vessels transiting the strait over the weekend fell to five a day, highlighting caution among operators concerned about attacks on shipping.

The United Kingdom Maritime Trade Operations agency said on Sunday that a tanker had been struck by a projectile while entering the strait on Saturday.

US Treasury Secretary Scott Bessent told Reuters on Sunday that the US was likely to impose new secondary sanctions on Iran every week.

Despite Monday’s rally, Brent and WTI were still on track to post modest losses for August after falling more than 4 percent last week, their first weekly declines in three weeks.

Trump also said on Sunday that oil secured under a recently struck deal with Venezuela would be used to replenish the US Strategic Petroleum Reserve, which has fallen to near its lowest level in 44 years.

Bangladesh Bank (BB) has extended until September 30 the deadline for affected business entities to apply for policy support for restructuring their operations and financial obligations.

The Banking Regulation and Policy Department (BRPD) of the central bank issued a circular to the managing directors and chief executives of all scheduled banks on Monday, outlining updated guidelines to ensure the effective implementation of its debt-restructuring framework.

Under the updated guidelines, borrowers who previously received policy support through the "Selection Committee for Policy Support for Business and Financial Restructuring" are also eligible to submit fresh applications to their respective banks by September 30.

As per the circular, for single entities or groups with total outstanding loan balances of Tk 1,000 crore or more, special rescheduling can be approved for up to 15 years, including a maximum grace period of two years based on banker-customer relations.

In cases of special restructuring, banks may extend the existing tenure by up to an additional four years beyond the timeframe specified in BRPD Circular No. 16/2022.

For borrowers with total outstanding debts under Tk 1,000 crore, the tenure and conditions outlined in the original BRPD Circular No. 07/2025 will remain applicable.

Borrowers who previously received benefits under BRPD Circular No. 07/2025 or via the Selection Committee can avail themselves of the expanded facility. Any grace period already enjoyed will be adjusted against the permitted timeline.

Unclassified loans (STD-0, 1, 2, and SMA) as of September 30, 2026, will qualify for special restructuring, while adversely classified loans (Sub-Standard, Doubtful, and Bad/Loss) will be eligible for special rescheduling. Banks must finalise all applications upon receiving the required down payments by December 31, 2026.

The central bank stated that these revised instructions take effect immediately.

The dollar inched lower on Monday, but remained near a roughly two-week high, as markets ramped up bets on a rate hike after hawkish remarks from Federal Reserve Chair Kevin Warsh and renewed Gulf tensions, while the yen traded near the closely watched 160-per-dollar level.

The US central bank will “have work to do” if policymakers do not get the confidence they need that inflation is heading down to 2 percent, Warsh said on Friday, in his clearest indication yet that further tightening may be needed to curb price pressure. The comments fuelled bets on a September rate hike.

Markets raised the implied probability of a move next month to 58 percent, while yields on interest-rate-sensitive 2-year US Treasury notes held just below a more than one-month high.

“Warsh’s prepared remarks seemed designed to lift rate-hike expectations, rebalance the September debate towards the hawks and rebuild his inflation-fighting credibility,” Elwin de Groot, head of macro strategy at Rabobank, said.

“Warsh delivered an important signal: the Fed is not relying on tighter financial conditions alone and remains willing to tighten further if underlying inflation stalls,” he added.

Investors are now turning their focus to upcoming US data, particularly Friday’s nonfarm payrolls report and next week’s consumer inflation figures, both of which could shape expectations ahead of the September Fed meeting.

The euro edged up roughly 0.11 percent to $1.1597, while sterling inched higher to $1.3543. Both currencies remained on track for their second consecutive monthly gains.

The dollar index , which measures the US currency against six major peers, was down 0.11 percent to 99.53 after hitting 99.73 on Friday, its strongest since August 17.

Even so, the index was still on track for a second consecutive monthly decline, as US Treasury bond-buyback plans earlier in the month revived debasement trades.

Elsewhere, renewed tensions in the Gulf drove oil prices higher, with Brent crude futures last up 2.5 percent on the day to $90.21 a barrel. US forces struck Iran’s Larak Island on Sunday, marking the first known American strikes on Iran since late July.

US President Donald Trump said in a social media post that Iran’s energy hub of Kharg Island is being “blown to smithereens” although there was no evidence that the island was under attack.

The National Board of Revenue (NBR) has exempted businesses and companies with annual turnover of up to Tk 2 crore from minimum turnover tax, easing a tax burden that applies regardless of whether a business makes a profit.

The tax authority issued a notification yesterday introducing a revised structure for the minimum turnover tax.

Under the new arrangement, businesses and companies with annual turnover of up to Tk 2 crore will not have to pay the minimum turnover tax.

Those with annual turnover above Tk 2 crore and up to Tk 4 crore will pay the tax at a rate of 0.5 percent, while businesses and companies with turnover above Tk 4 crore will continue to pay the existing 1 percent minimum turnover tax.

The move is expected to provide relief to small businesses, particularly those operating on thin profit margins, as the minimum turnover tax is payable even when a business reports little or no profit.

The revised threshold is also aimed at reducing the tax burden on smaller businesses and encouraging compliance among firms with relatively low turnover.

As Bangladesh prepares to graduate from the least developed country (LDC) category, private-sector leaders have demanded detailed, sector-specific action plans for SMEs, agriculture, pharmaceuticals and other key industries, rather than broad and generic reform pledges.

Speaking at a consultation organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) in the capital today (31 August), business leaders warned that plans alone mean little without disciplined implementation and continuous monitoring to ensure real outcomes.

Chaired by FBCCI Administrator Md Fazlul Hoque, the meeting also called for stronger entrepreneurial capacity, skills development, greater investment in research and innovation, wider technology adoption, affordable financing, and upgraded logistics, along with an uninterrupted energy supply, all of which business leaders say are essential for industries to remain competitive once LDC-related trade benefits expire.
At the beginning of the meeting, FBCCI Secretary General Md Almgir presented a report on the challenges and opportunities associated with Bangladesh's LDC graduation.

The report noted that Bangladesh is expected to lose duty-free market access and trade preferences such as the Generalised Scheme of Preferences (GSP) and Everything But Arms (EBA) in the European market, one of its major export destinations, following graduation.

Stricter intellectual property rights (IPR) regulations will also pose challenges to several industries, including the pharmaceutical sector, the report said.

Against this backdrop, the report stressed the importance of ensuring private-sector participation in the government's reform initiatives.

During the open discussion, private-sector entrepreneurs said the benefits of LDC graduation would not materialise unless the action plans were realistic and implementable.

They proposed collecting accurate data and information from the grassroots level to identify the priority needs of different sectors and formulate strategies accordingly.

Dhaka Chamber of Commerce and Industry (DCCI) Senior Vice President Rajib H Chowdhury said Bangladesh lacks sufficient negotiation capacity and needs to strengthen it.

"Bangladesh's negotiation capacity needs to be enhanced. At the same time, the National Single Window must be made fully operational," he said.

Shamim Ahmed, president of the Bangladesh Plastic Goods Manufacturers and Exporters Association, said a large portion of the country's plastic industry produces copycat products.

After LDC graduation, intellectual property issues would become a major challenge for the sector, much like the pharmaceutical industry, he said.

He called for urgent government-private sector action plans to protect industries such as plastics, light engineering and cottage, micro, small and medium enterprises.

Ismat Jarin Khan, president of the Patuakhali Women Chamber of Commerce and Industry, urged the FBCCI to ensure that strategies for sustainable LDC graduation do not remain focused only on industries based in Dhaka.

She also called for easy-term loans, skills development and logistics support for women entrepreneurs at the grassroots level.

K S M Mostafizur Rahman, president of the Bangladesh Agro-Chemical Manufacturers Association (BAMA), said Bangladesh would face major challenges regarding intellectual property rights after LDC graduation.

The pharmaceutical, agriculture and agro-chemical sectors would be among those affected, he said, urging the government to expedite the registration of products manufactured in Bangladesh that fall under patent protection.

Attending the meeting Md Munir Chowdhury, national trade expert of the Bangladesh Regional Connectivity Project-1 under the Ministry of Commerce, said private-sector stakeholders must clearly identify the challenges facing their respective sectors.

He suggested forming councils involving the government and private sector to address those challenges and adopting results-based action plans.

At the meeting, FBCCI Administrator Md Fazlul Hoque urged all district chambers and sector-based associations to submit their specific proposals in writing to the FBCCI, so that these could be analysed and placed before policymakers, and said that the additional three years Bangladesh had received must be utilised properly.

He added that if the private sector's capacity could be enhanced, the country's competitiveness in international markets would also increase, and sought cooperation from all district chambers and sector-based associations to this end.

Former FBCCI Administrator Md Hafizur Rahman, International Trade Expert of the Support to Sustainable Graduation Project Nesar Ahmed, members of FBCCI's support committees, former FBCCI directors, FBCCI Secretary General Md Almgir, BGMEA Director Sheikh Hossain Mohammad Mustafiz, BKMEA Vice President Mohammad Rashed, BJMA Chairman Abul Hossain, BTMA Director Sajid Ishraq, Bangladesh Women Chamber of Commerce and Industry President Sangeeta Ahmed, Bangladesh Jute Diversified Products Manufacturers and Exporters Association President Md Rashedul Karim Munna, and leaders of various chambers and associations also attended the meeting. Representatives from the Ministry of Commerce, Ministry of Industries, Bangladesh Standards and Testing Institution (BSTI) and ICT Division were also present.

The cabinet has approved the National Pay Scale 2026, with basic salaries of government employees set to be implemented in three phases between 1 July 2026 and 1 July 2027, while various allowances will take effect simultaneously from 1 January 2028.

The weekly cabinet meeting, with Prime Minister Tarique Rahman in the chair, began at the Secretariat around 5:30pm, according to a press release issued by the Prime Minister's Office.

The new pay scale will retain the existing 20 grades for government employees. The minimum starting basic salary for Grade 20 has been set at Tk20,000, while the maximum prescribed salary for Grade 1 will be Tk1,56,000.

The government said the new structure was approved after considering its financial capacity, the overall economic situation, inflation, the cost of living and the need for a balanced and rational pay structure.

Under the new scale, the ratio between the salaries of the lowest and highest grades will be reduced from the existing 1:1.945 to 1:1.78.

As a result, the starting basic salary for the lowest grade will increase by 142%, while the prescribed salary for the highest grade will increase by 100%.

Basic pay to be implemented in three phases

Although the National Pay Scale 2026 will be effective from 1 July 2026, the government has decided against implementing the entire pay structure at once because of its financial implications and potential impact on overall inflation.

The basic salaries will be implemented in three phases between 1 July 2026 and 1 July 2027 across the 2026–27 and 2027–28 fiscal years.

Employees in Grades 10 to 20 will be given priority in implementation, considering their relatively lower incomes.

The government has also decided to introduce all allowances simultaneously from 1 January 2028.

The same phased approach will apply to increases in net pensions.

Lower pensioners to get higher increases

The government has postponed full implementation of the "One Rank One Pension" (OROP) system until 2030.

According to the Finance Ministry, full implementation at present would involve substantial financial costs, while the government lacks data on civilian employees who retired before 2019.

As an interim measure, the government has approved slab-based increases in net pensions, with lower-paid pensioners receiving higher percentage increases.

Under the new formula, net pensions of Tk9,000 or less will increase by 100%, while those between Tk9,001 and Tk20,000 will rise by 75%. Pensions ranging from Tk20,001 to Tk30,000 will increase by 65%, those between Tk30,001 and Tk40,000 by 60%, and pensions of Tk40,001 or more by 55%.

The government said the measure will particularly benefit pensioners who retired many years ago and currently receive relatively low net pensions.

Mobile allowance expanded to all grades

The government has also decided to expand mobile allowance coverage to employees across all 20 grades.

Previously, the allowance was available only to employees up to Grade 5. The expansion takes into account the growing use of internet and digital communication in government offices.

Tk3,000 allowance for children with disabilities

For the first time, the government will introduce a monthly allowance for government employees with children with special needs.

An employee will receive Tk3,000 per month for each child with special needs.

Around 33 lakh people to benefit

The new pay scale is expected to benefit around 24 lakh military and civilian employees, as well as more than 9 lakh retired employees and other eligible beneficiaries.

The government estimates that implementation will require an additional annual expenditure of around Tk1,05,580 crore. The required funds have been earmarked in the budgets for the relevant fiscal years under the Medium-Term Budget Framework.

Meanwhile, a separate committee has been formed for the judicial service. Based on its recommendations, a separate Bangladesh Judicial Service pay scale will be approved and implemented in phases from 1 July 2026 in line with the National Pay Scale 2026.

The Finance Division will issue the necessary gazettes, orders and instructions to implement the new pay scale, detailing the procedures for salary fixation, allowances, pensions and other post-retirement benefits.

The government said phased implementation would help ease pressure on inflation while improving the financial security and motivation of government employees and contributing to a more efficient and people-oriented public administration.

John Ternus takes over as Apple’s chief executive on Tuesday, inheriting a company that towers over the smartphone market but trails its rivals in artificial intelligence.

One of his biggest challenges will be balancing the company’s dependence on China while parrying acute political pressure from the White House.

The handover ends Tim Cook’s 15-year run, replacing the operations specialist who built Apple’s supply chain with the engineer who built its hardware.

Ternus, 51, joined Apple’s design team in 2001 and worked his way up to senior vice president of hardware engineering, reporting to Cook.

He leads the engineering teams behind Apple’s entire product lineup, including the iPhones that generate most of the company’s revenue.

He gets barely a week to settle in, with Apple holding its annual iPhone event on September 9, where it is expected to unveil its first foldable handset.

“Tim Cook left the house in phenomenal order,” said Dan Ives, partner and senior managing director at investment firm Yorkville Ives & Co.

“But now it’s about Ternus defining the AI chapter.”

Ives expects the new chief executive to lean into what he knows.

“There’s no reason to fix what’s already working,” he said, predicting Ternus will concentrate on hardware innovation while leaving Cook’s supply chain intact.

Some analysts had argued software chief Craig Federighi was the more logical pick for a company scrambling to catch up on AI.

Carolina Milanesi, an analyst at Creative Strategies, said that misreads how consumers actually adopt technology.

“Consumers are still buying hardware first, and it’s going to be like that for a long time,” she said. “You’re not going to discover the value of AI if you’re not interested in the hardware.”

Ternus earned a bachelor’s degree in mechanical engineering from the University of Pennsylvania and worked as an engineer at Virtual Research Systems before joining Apple.

Inside the company he is credited with driving a push to make products more durable, reliable and resilient, and with design work that cut their carbon footprint.

The harder question is what kind of leader he becomes.

“Even people that know him now don’t know him as a CEO,” Milanesi said.

“You might know him as the head of engineering, but once you’re CEO, things change. Your responsibility is bigger, your power is bigger. You’re dancing a different kind of dance.”

Nowhere is that gap wider than in the geopolitical role Cook excelled at, courting both Beijing and Donald Trump’s White House to protect a supply chain that runs largely through China.

Apple’s manufacturing operation is among the most complex in corporate history, a web of hundreds of suppliers and assembly lines that Cook painstakingly built over decades.

Cook in recent years began shifting some of the work elsewhere -- iPhone assembly to India, other production to Vietnam -- but the diversification has been gradual with China, one of Apple’s biggest consumer markets, still anchoring the system.

Complicating matters, Trump has repeatedly demanded Apple build iPhones on American soil, threatening tariffs on those made overseas.

Cook avoided the heaviest blows of Trump’s trade war by cultivating the president directly, making US investment commitments and political donations -- all while also keeping Beijing onside.

The tricky political terrain will be new for Ternus.

“He knows Apple Park like the back of his pocket in terms of hardware,” Ives said of Ternus. “But on the global stage -- that’s probably one of the biggest areas where he’s going to have to learn on the job.”

Cook is not going far. He becomes executive chairman of Apple’s board on the same day, with a mandate the company has said includes engaging policymakers around the world.

“That was really clever,” said Milanesi, arguing the arrangement frees Ternus from a role Cook has handled alone for years.

The September 9 iPhone event will be the first public measure of the handover.

A foldable iPhone would be the most significant redesign in years, and Ternus will be its face -- eight days into the job.

“This is a moment that they created for him,” Milanesi said.

Between fiscal year 1995-96 and fiscal year 2021-22, Bangladesh experienced an average inflation rate of 6.3 percent over the 26 years. There were episodic divergences during FY2012 and FY2013 from this long-term trend, but they were corrected quickly. This stability of the price level has been a big win for Bangladesh, playing a major role in boosting investment and protecting the incomes of the poor and lower-income groups.

By contrast, Bangladesh has experienced an average inflation rate of 9.3 percent over the past four years, from FY2023 to FY2026, and the inflation rate remains stubbornly high. This unusually high pace of inflation has hurt investment and the incomes of the poor and lower-income groups. Even the middle class is now feeling the pain of rising prices that continue to outstrip income growth for most households. Inflation control is arguably the biggest economic challenge facing the government today.
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When the current episode of inflationary pressure first emerged in FY2023, most people believed it was a temporary phenomenon caused by the combined effects of Covid-19-related disruption to global supply chains and the trade disruption caused by the Ukraine war. There was therefore a belief that this external-shock-related inflationary episode would pass once the world adjusted to these events and the surge in global commodity prices and global inflation subsided. While global commodity prices have normalised and the global inflation rate has sharply declined, inflation in Bangladesh remains stubbornly high. Indeed, the average inflation rate in most countries has come down, including in India, Thailand, Malaysia, Indonesia and Vietnam, but not in Bangladesh.
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Sadiq Ahmed

Many explanations have been provided for why the inflation rate remains persistently high, including holding profiteers and syndicates responsible. In my own write-ups, I have argued that the inflationary spiral was ignited by Covid-19-related expansionary monetary and fiscal policies and then accentuated by a deep supply shock resulting from a sharp fall in the GDP growth rate, especially in the manufacturing sector, and unprecedented import cutbacks. Unfortunately, the inflationary effect of the supply crunch is not yet well understood or adequately reflected in policymaking. In particular, the adverse effects of the import crunch on domestic prices are still not well appreciated.

The country’s total import volume has fallen by 31 percent since FY2022. This is the outcome of trade and exchange restrictions and the fall in import demand for capital goods owing to the sharp slide in public and private investment rates. Some researchers may argue that FY2022 was an abnormal year. The cutbacks remain deep if, instead, the base-year values of FY2021 are used. Imports fell by 14 percent between FY2021 and FY2026. The import cutbacks were broad-based, although the deepest reduction happened in capital goods, which fell by 41 percent. Intermediate goods and consumer goods also saw substantial cutbacks, declining by 7 percent and 9 percent respectively.

With an average GDP growth rate of 5 percent and an empirically verified income elasticity of demand of 1, imports should have grown by 25 percent between FY2021 and FY2026 instead of falling by 14 percent. The import supply shock is obvious. Additionally, given the crunch in domestic supply, reflected in the sharp slowdown of GDP growth, especially in the manufacturing sector, the adverse effects of the import cutbacks on domestic prices and inflation are magnified.

The axe on imports is the bluntest instrument that policymakers tend to use to respond to a balance of payments crisis. Its temporary use is understandable to avoid an unsustainable run on reserves. But import control is a poor instrument for achieving a sustainable balance of payments position over the longer term. It is also inconsistent with GDP growth and price stability objectives.

Moving forward, to manage inflation, the government must pursue policy reforms that help increase both domestic and import supply. Since recovery of the domestic economy will take time in view of the deep-seated problems plaguing the Bangladesh economy, including the fragile banking sector, the crisis in the energy sector and the severe fiscal constraint, the fastest way of lowering the inflation rate is to allow a rapid recovery of imports, especially consumer goods, including food items. All import restrictions in terms of margin and licensing requirements must be eased. Import duties, including supplementary and regulatory duties, must be cut to the maximum extent possible, at least for a limited duration until domestic supply recovers and inflation is brought down to the 4-5 percent level.

The adverse BoP effects of rising imports should be tackled through export diversification and greater mobilisation of remittances. The exchange rate should be fully flexible and market-based, without intervention from Bangladesh Bank. A fully flexible, market-based exchange rate is essential to diversify and boost exports and mobilise remittances without the need for fiscal subsidies, which are in any case unsustainable in an environment of severe fiscal constraint.

Sadiq Ahmed is vice-chairperson of the Policy Research Institute of Bangladesh (PRI). He can be reached at sadiqahmed1952@gmail.com.

The government yesterday (31 August) approved the 9th National Pay Scale, raising public servants' salaries by up to 142% – at a time when the country is grappling with energy crisis-driven production disruptions, weak revenue collection and years of high inflation.

Implementing the new structure will cost an additional Tk105,580 crore. Once all allowances take effect in January 2028, annual government spending on salaries and allowances will reach nearly Tk200,000 crore – roughly half of the revenue collection last fiscal year.

Under the new scale, basic pay for the lowest, 20th grade – where employees with Class VIII education are recruited – will rise 142%, from Tk8,250 to Tk20,010. This represents a 388% increase over the past 17 years.

Employees will also receive a house rent allowance of 50-60%, along with medical, education, transport and mobile phone allowances. Including these benefits, total monthly remuneration for a 20th-grade employee will reach around Tk35,000.

Grade 9 is the entry level for BCS cadre officers and first-class non-cadre officials. Their basic pay, which rose from Tk11,000 in 2009 to Tk22,000 under the 2015 pay scale, will double again to Tk44,000 under the new structure – a 300% increase from 2009.

Private sector employees in similar stages receive much less salary.

At the top of the hierarchy, Grade 1 basic pay will double to Tk156,000 from Tk78,000. Secretaries generally fall under this grade. Their basic pay was Tk40,000 in 2009, meaning it will have risen 290% over the period.

The new basic salaries will be introduced in three phases from 1 July this year to 1 July 2027, with all allowances taking effect simultaneously from 1 January 2028. Public servants retiring from July this year onwards will also receive pensions calculated under the structure.

Cabinet Secretary Nasimul Gani told journalists after the Cabinet meeting that the scale was approved considering the government's financial capacity, the broader economic situation, inflation, living costs, public servants' living standards, and the need for a balanced and rational pay structure.

However, sources said several ministers opposed implementation amid the government's financial constraints and difficulties in financing higher energy import costs. Prime Minister Tarique Rahman approved the proposal after hearing the ministers' views, they said.

Gani was also asked whether MPO-listed teachers would be covered by the new pay scale. He replied, "I cannot say at this stage. A decision will come when the matter is settled."

Asked whether the government had any plans regarding journalists' salaries, he said the issue had been discussed, but it was too early to say what decision would follow.

Government-appointed FBCCI administrator Md Fazlur Rahman said the phased implementation would not put significant pressure on private-sector wages or fuel inflation.

"Private-sector employees know their companies are stagnant. As the new pay structure will be implemented gradually, it will not significantly fuel inflation or force private firms to raise wages," he told TBS.

In a press release, the Cabinet Division said the new pay scale would strengthen public servants' financial security and motivation while helping build an efficient, dynamic and people-oriented administration.

When the 8th National Pay Scale was introduced in 2015 with a 100% increase in basic salaries, then finance minister Abul Maal Abdul Muhith said higher pay would curb corruption and restore dynamism to the administration.

Mahbub Ahmed, finance secretary at the time, told TBS yesterday that corruption had instead increased after the pay hike. "Corruption cannot be directly linked to whether a new pay scale should be introduced. Many officials are honest and shouldn't remain on the same pay scale for 11 years," he said.

One rank, one pension

The new pay structure also proposes a "one rank, one pension" system for military and civilian personnel, in line with the BNP's election manifesto.

Currently, military officers appointed to civilian organisations can receive pensions from both positions, with the same provision applying to civilian officials.

The dual-benefit system will be abolished and replaced with one-rank, one-pension. As data on civilian retirees before 2019 are unavailable, the system will be phased in by 2030.

The government will also raise pensions for long-retired public servants who receive much less than those retiring today from equivalent positions.

Pensions of up to Tk9,000 will be doubled; those of Tk9,001-20,000 will rise 75%; Tk20,001-30,000 by 65%; Tk30,001-40,000 by 60%; and pensions above Tk40,000 by 55%.

Employees with children with disabilities will receive Tk3,000 a month for each child with special needs. Mobile phone allowances, previously available only to officials up to Grade 5, will now be extended to all government employees.

From dearness allowance to new pay scale

Following the fall of the Hasina government, the interim government announced a dearness allowance amid protests by public servants. It later dropped the plan after facing criticism for raising VAT on more than 100 products to boost revenue.

The interim government subsequently formed a pay commission, despite no fresh demand from public servants. The commission recommended a new structure days before the election, proposing salary increases of 100% for Grade 1 and up to 142% for Grade 20.

The interim government left office without implementing the recommendations, leaving the elected government to do so and creating pressure for their adoption.

The BNP had pledged a new pay scale in its election manifesto. Given the government's limited financial capacity, the Cabinet, chaired by Prime Minister Tarique Rahman yesterday, decided to implement it in four phases over two years.

Lessons from the 2015 pay scale

In 2015, a pay commission headed by Dr Farashuddin recommended doubling public servants' salaries and introducing a 5% annual increment.

It also recommended no further pay commissions, with annual increments to be adjusted for inflation whenever it exceeded 5%. The commission proposed scrapping the time-scale and selection-grade systems and automatically promoting officials to the next grade after 10 years without promotion.

Mahbub Ahmed, who was the finance secretary when the 2015 pay scale was implemented, told TBS yesterday that the government had planned a Finance Division wing to calculate inflation and recommend annual increments accordingly.

"But that did not happen. I can't remember why," he said.

As inflation rose amid the Russia-Ukraine war, the then Awami League government introduced an additional 5% incentive on top of the regular 5% annual increment after the 2024 election. The interim government later raised the incentive to 15%, which remains in effect. Public servants will lose the incentive once the new pay scale takes effect.

New pay scale justified amid inflation, but funding a challenge

-Fahmida Khatun, Distinguished Fellow, Centre for Policy Dialogue

The government pay structure has remained unchanged for a long time. During this period, inflation has risen significantly. As a result, the real income and purchasing power of employees, particularly those in lower and middle grades, have declined. Therefore, there is a reasonable case for increasing their salaries.

However, the key consideration is how the increase is implemented.

A salary increase does not necessarily lead to higher inflation. Its impact will depend on how it is financed, the scale of the increase, the availability of goods and services in the market, and coordination between monetary and fiscal policies.

If the increase is financed through bank borrowing, money creation or cuts in development spending rather than higher tax revenue, it could put additional pressure on the economy.

Higher incomes for government employees will increase consumption and aggregate demand. The government should therefore take steps to increase the supply of food, housing, transport, and goods and services to contain any resulting inflationary pressure.

Another important consideration is fairness. If government employees receive significant salary increases while the incomes of employees in autonomous institutions, state-owned enterprises, project-based and outsourced positions, as well as teachers, journalists and private-sector workers, remain unchanged, disparities and dissatisfaction among different professional groups could widen.

Although mechanisms exist to determine wages in different sectors, including the Wage Board for journalists, they are often irregular, outdated and weakly implemented. Salaries in the public and private sectors cannot be determined in the same way.

Nevertheless, there should be reasonable alignment among minimum wages, Wage Board decisions and the cost of living.

Financing the new pay structure will be a major challenge. The government already faces a budget deficit, which could widen significantly as a result of the additional expenditure. The budget, however, already includes an allocation for implementing the new pay structure.

Another key issue is whether higher salaries will be matched by improvements in the efficiency and capacity of government employees. If productivity does not improve, the country and the economy will receive little return from the additional expenditure.

On the other hand, if greater efficiency among government officials speeds up project implementation and reduces waste and corruption, the government could save money. In that case, the impact of the pay increase on inflation may be limited.

The government is introducing the new pay structure to improve the welfare of its employees, but it also has responsibilities towards workers in other sectors, particularly the private sector. It should take effective measures to prevent the new pay structure from widening the wage gap between public- and private-sector employees.

Salary was supposed to be inflation adjusted, can't recall why it didn't happen

-Mahbub Ahmed, Former finance secretary

The Pay Commission formed in 2015 under the leadership of Dr Farashuddin Ahmed had recommended that no new pay commission should be formed. Instead, government employees were to receive a 5% annual increment every 1 July.

If the inflation rate in any year was higher, the increment would also be adjusted in line with inflation.

A small wing comprising three or four officials under the Finance Division was supposed to be set up to calculate inflation and determine the appropriate rate of annual increments. But that never happened. I do not remember now why it was not done.

Even after salaries were doubled in 2015, corruption did not decline. Rather, it increased.

But it would not be right to compare corruption with whether or not a new pay structure is introduced. There are many honest officials in the administration. Those who do not engage in corruption should not have to remain on the same pay structure for 11 years.

At the same time, there are some positions where, if the salary offered is specified, many people would be willing to take up those jobs.

Government employees have been receiving salaries under the same pay scale for 11 years. Although they receive annual increments, those increases have not kept pace with inflation and the rising cost of living over this period.

A proposal has now been made to increase the salaries of peons by 100% and set their pay at Tk20,000. How can a family live in this country on less than that?

But the question is: where will the money for implementing a new pay structure come from?

The additional spending will ultimately put pressure on ordinary people. Government employees also pay taxes and VAT, so the burden will fall on them as well.

When the eighth pay structure was implemented in 2015, we conducted a study and found that the new pay structure did not cause a significant increase in inflation.

This was because the amount of money spent as a result of the new pay structure was not very large compared with the amount of money already circulating in the market.

But Bangladesh's financial problems have now become two-pronged. Whichever way you go, there is a problem. The revenue collection situation is not favourable. The target set in the budget is unlikely to be achieved.

As a result, a budget deficit is inevitable. Although funds have been allocated in the current fiscal year's budget to implement the new pay structure, there would be a budget deficit even without this additional expenditure.

Bangladesh's budget is equivalent to 15% of GDP, but actual spending stands at 12% to 14% of GDP. As a developing country, the budget should be around 25% of GDP. But this is not possible because of weak revenue collection.

Therefore, the government needs to focus on increasing revenue collection both to keep the economy dynamic and to implement the new pay structure.

Inflation will rise, putting pressure on private sector

-Anwar-Ul Alam Chowdhury Parvez, President, Bangladesh Chamber of Industries

It was not the right time to announce the new pay scale for government employees as the country is already facing persistent inflationary pressure.

The announcement could further fuel inflation in the market, which may have a negative impact on private-sector employees as well as industries, particularly labour-intensive sectors.

It will become difficult for private-sector employees to make ends meet. As a result, they are likely to demand higher salaries, which is understandable. However, given the current situation, does industry have the capacity to accommodate such wage increases?

The industry is already facing multiple challenges, including severe shortages of gas and electricity, high lending rates and an unstable law-and-order situation.

In this situation, if companies are forced to raise salaries, they will lose competitiveness as their production costs increase. They may struggle to sell their products, ultimately having a significant negative impact on industry.

The National Board of Revenue has exempted businesses and companies with annual turnover of up to Tk2 crore from minimum turnover tax, easing a tax burden that applies regardless of profitability.

NBR issued an order in this regard today (31 August) with effect immediately.

Under the revised structure, businesses with annual turnover of up to Tk2 crore will pay no minimum turnover tax. Those with turnover above Tk2 crore and up to Tk4 crore will pay a minimum tax of 0.50%, while businesses with turnover above Tk4 crore will continue to pay 1%.
Previously, a 1% minimum turnover tax was imposed regardless of whether a business made a profit or incurred a loss.

The business community has welcomed the move while calling for further reform of the system.

The Federation of Bangladesh Chambers of Commerce and Industry sent a letter to the finance minister on 24 August, urging the government to gradually move away from the 1% minimum turnover tax imposed on businesses and companies.

Md Fazlul Hoque, administrator of the business body, recently told TBS that taxation should ultimately be based on actual income, urging the abolition of the minimum turnover tax system in favour of taxation based on actual profits.

Until FY25, most companies, with some exceptions, were subject to a minimum turnover tax of 0.60% of annual turnover. Non-company businesses with annual turnover above Tk4 crore were subject to a 0.25% minimum turnover tax.

The 2025 budget raised the minimum turnover tax rate to 1% for both categories, raising concerns among businesses with low profit margins and loss-making firms, which were required to pay tax despite having no profits.

The latest exemption is expected to provide some relief to smaller businesses, NBR officials hope.

The government is approaching Muslim-majority countries and Islamic institutions to find a strategic partner for Sammilito Islami Bank, formed by merging five troubled private banks plagued by irregularities and corruption during the Awami League government.

Qatar has already been approached to invest in the state-owned bank. During his recent visit to Qatar, Prime Minister's Adviser on Finance and Planning Rashed Al Mahmud Titumir formally proposed that the country become a strategic partner of Sammilito Islami Bank.

"We have already proposed that Qatar become a strategic partner. Discussions were held there, but nothing has been finalised yet," Titumir told The Business Standard.

"Further discussions will take place with Qatar, and we will also approach other Muslim countries and organisations to become strategic partners of Sammilito Islami Bank," he said.

Titumir said the government had cancelled its earlier decision to impose a "haircut" on depositors and decided to repay their deposits in full.

"There are two ways to repay depositors – providing money from the treasury or bringing a foreign country or organisation into the bank's ownership as a strategic partner," he said. "The government is therefore seeking strategic investors from Muslim countries"

A strategic partner in a bank typically contributes to long-term growth, technology upgrades and business expansion, while playing an active role in management and decision-making.

Such partners can also strengthen a bank's capital base through substantial long-term funding or equity investment and provide financial support during crises.

FDR account holders must remain under scheme to receive profits

The Banking Regulation Department of Bangladesh Bank in a circular yesterday (31 August) said customers of Sammilito Islami Bank can withdraw the full amount held in their fixed deposit receipts (FDRs) at once, but they will not receive any profit if they do so.

FDR account holders must remain under the Bank Resolution Scheme to receive profits.

Meanwhile, depositors with current and savings accounts will be able to withdraw their principal amount in full at once, along with the applicable profit.

Sammilito Islami Bank is set to begin returning the principal deposits of individual customers from 7 September. Initially, customers will be allowed to withdraw or encash their entire principal amount in a single transaction. However, they will not receive any profit in this case. The bank's branches will start accepting applications for this from today.

According to Bangladesh Bank's announcement, normal transactions for individual customers are scheduled to resume from today.

However, several days are needed to complete preparations, including sending cash requisitions to branches and sub-branches, ensuring the supply of cash from Bangladesh Bank and establishing secure cash-management arrangements. As a result, the bank has decided to begin the full-scale return of depositors' funds from 7 September.

Sammilito Bank's status

Sammilito Islami Bank was formed by merging First Security Islami Bank, Social Islami Bank, Global Islami Bank and Union Bank, all of which were controlled by the S Alam Group.

The fifth bank, Exim Bank, was controlled by businessman Nazrul Islam Mazumder, who was considered close to the Awami League.

The five banks had struggled to return depositors' money amid severe financial distress. The interim government subsequently merged them into a single state-owned bank.

According to Bangladesh Bank data, the merged banks have around 76 lakh depositors with deposits totalling Tk1,42,000 crore. Individual depositors hold around Tk15,000 crore in savings accounts.

Of the five banks' combined loans of Tk1,92,000 crore, around 86% are now classified as non-performing, while their capital shortfall exceeds Tk150,000 crore.

The state-owned Sammilito Islami Bank began operations in November last year. It has authorised capital of Tk40,000 crore and paid-up capital of Tk35,000 crore.

The government has provided Tk20,000 crore of the paid-up capital, while the remaining Tk15,000 crore is to be issued as shares to depositors.

Factory activity in China contracted in August for a second straight month, official data showed Monday, as soft demand weighs on the world's second-largest economy.

Leaders in Beijing are seeking to maintain pace despite hurdles including trade frictions with Washington and an entrenched property-sector crisis that has spooked consumers.

The manufacturing purchasing managers' index (PMI) came in at 49.8 in August, according to the National Bureau of Statistics, slightly below the 50 mark separating expansion from contraction.

Still, the reading was higher than the 49.5 forecast in a Bloomberg survey of economists, and an improvement on the 49.2 recorded in July.

NBS statistician Huo Lihui said in a statement it showed an "expansion in both production and market demand in the manufacturing sector".

Certain sectors saw "weak market activity", Huo added, including steel production and chemical materials.

The non-manufacturing PMI, which measures activity in other areas including services and construction, came in at 49.0, the data showed.

That was unchanged from July but missed the Bloomberg forecast of 49.4.

Huo noted "weak" activity in wholesale, retail and capital market services in August, which were all "below the critical point".

"The rise of commodity prices may have benefited some firms in the upstream manufacturing sector, as both input and output price indexes rose last month," wrote Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

"But this is driven by supply rather than demand," he added.

China's economy has been supported by a historic boom in exports that has shown no sign of stopping in recent months.

It has also been helped by the global artificial-intelligence frenzy that has increased demand for its tech products.

With storm clouds building elsewhere, economists argue that Beijing needs to shift towards a model powered more by household consumption than traditional growth drivers including infrastructure investment and property.