Bangladeshi garment exporters will today ask visiting US trade officials in Dhaka to clarify how a promised zero reciprocal tariff will apply to apparel made with American cotton and other US textile inputs.

The provision is included in the US-Bangladesh Agreement on Reciprocal Trade signed in February this year, but exporters say they have yet to benefit from it.

“We will raise this issue with the USTR high-ups in the meeting tomorrow [Tuesday],” said Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

A delegation from the Office of the United States Trade Representative (USTR), led by Assistant US Trade Representative for South and Central Asia Brendan Lynch, will visit Dhaka from May 5 to May 7.

In a statement issued ahead of the visit, the US Embassy in Dhaka said the United States looks forward to partnering on the implementation of the reciprocal trade agreement. The delegation is expected to discuss ways to strengthen trade and investment ties.

Under Article 5.3 of the reciprocal trade agreement, the United States commits to establishing a mechanism allowing certain textile and apparel goods from Bangladesh to enter the American market at a zero reciprocal tariff rate.

The deal says that a to be specified volume of apparel and textile imports from Bangladesh may qualify for the reduced rate. That volume will be determined in relation to the quantity of US-produced cotton and man-made fibre textile inputs exported to Bangladesh.

However, BGMEA President Khan said Bangladesh is not currently enjoying the benefits in the US market.

He said the zero-duty facility would be the main agenda at the scheduled meeting between the visiting officials and BGMEA leaders in Dhaka.

A senior commerce ministry official said the USTR delegation will also meet Commerce Minister Khandakar Abdul Muktadir at the secretariat today. Discussions are expected to cover the reciprocal trade deal, broader bilateral trade matters, labour rights and intellectual property.

The USTR is currently conducting two investigations covering 60 countries, including Bangladesh. One is about forced labour in industrial units, while the other relates to industrial overcapacity that could hurt the US manufacturers.

In a position paper submitted to the commerce ministry recently, BGMEA said the Bangladesh garment industry does not have overproduction capacity that could harm the American manufacturing sector and is free from forced labour, as exporters comply with internationally recognised labour laws.

The association said that in a market-driven economy, production levels constantly adjust to shifts in demand, input costs and supply chain conditions. Determining “excess capacity” without clear parameters or methodology is a major challenge.

According to USTR data, US goods trade with Bangladesh totalled an estimated $11.8 billion in 2025. US imports from Bangladesh stood at $9.5 billion, up 13.3 percent from 2024, while US exports to Bangladesh were $2.3 billion, up 1.4 percent.

The US goods trade deficit with Bangladesh was $7.1 billion in 2025, a 17.9 percent increase from the previous year.

Garments account for 86 percent of Bangladesh’s exports to the United States.

In its position paper, BGMEA said the Bangladesh apparel sector has not expanded suddenly or in a way that would indicate structural excess capacity. The industry growth should be viewed over the long term.

Over the past decade, the sector has followed a steady growth path, it said, driven by global demand and shifting sourcing strategies rather than policy-induced expansion.

After more than four decades of development, Bangladesh exported garment products worth $39.3 billion in fiscal year 2024-25, accounting for nearly 7 percent of the global apparel market. It is now the world’s second-largest garment exporter after China.

In 2025, Bangladesh accounted for 10.73 percent of US apparel imports by volume and 10.53 percent by value, according to the American Apparel and Footwear Association (AAFA).

This week, a separate USTR report said Bangladesh has stayed off the latest US intellectual property rights watch lists. However, Washington urged Dhaka to strengthen enforcement to prevent unfair trade practices.

In its annual Special 301 Report, the USTR identified 26 trading partners with concerns over intellectual property protection and enforcement.

State-owned companies listed on the stock market delivered mixed performances in the January-March quarter of the 2025-26 fiscal year, reflecting uneven sectoral health.

Quarterly public disclosures show energy firms, particularly oil marketing companies, remained profitable, while several entities in financial, gas and industrial sectors continued to incur losses, signalling structural weaknesses.

Oil firms maintain steady profits

The three listed oil marketing companies – Padma Oil Company, Meghna Petroleum and Jamuna Oil – remained profitable in the third quarter of the current fiscal year.

However, their revenues declined compared with the same period last year, reflecting weaker earnings from core operations. Non-operating income, however, played a significant role in sustaining overall profitability.

During the quarter, notable shifts were observed in cash positions and inventory management. Fluctuations in global fuel prices, import costs, stock management and cash flow dynamics were reflected in their financials.

Padma Oil posted a profit of Tk132.37 crore in the January-March quarter FY26, down from Tk145.38 crore in the same period in FY25. Its revenue fell to Tk85.43 crore from Tk92.30 crore.

Meghna Petroleum's profit dropped to Tk83.94 crore from Tk141 crore, while revenue declined to Tk22.95 crore from Tk28.02 crore.

The company said lower collections from customers and reduced payments to suppliers and employees significantly weakened cash flow from operations, leading to a sharp decline in net operating cash flow.

In contrast, Jamuna Oil recorded profit growth, earning Tk139.78 crore compared with Tk110.78 crore. However, its revenue declined to Tk52.12 crore from Tk70.41 crore.

The company in its disclosure said interest income on deposits with Sammilito Islami Bank was not recognised due to uncertainty over recovery. This reduced both total income and net profit, directly affecting earnings per share.

It added that a conservative accounting approach was adopted, excluding uncertain income, which resulted in lower reported EPS. The company also said reduced credit and accruals led to a decline in net operating cash flow per share compared with June 2025.

7 firms remain in red

The Investment Corporation of Bangladesh (ICB) continued to post heavy losses, reporting Tk277 crore in the quarter, up from Tk161 crore a year earlier. Notably, its revenue remained negative at Tk221 crore, compared with negative Tk63 crore in the same period last year.

Titas Gas Transmission and Distribution Company recorded a loss of Tk224 crore, slightly lower than Tk236 crore a year earlier. Its revenue declined to Tk8,613 crore from Tk9,023 crore.

Dhaka Electric Supply Company (Desco) managed to reduce its losses to Tk32 crore from Tk72 crore, while revenue edged up to Tk182.41 crore.

National Tubes Limited slipped into loss, posting Tk1.31 crore in losses against a profit of Tk1.43 crore a year earlier. Its revenue fell to Tk8.12 crore from Tk13.51 crore.

Eastern Cables Limited also remained in the red, reporting a loss of Tk3.45 crore, marginally lower than Tk3.58 crore a year earlier, although revenue rose slightly to Tk8.52 crore.

ICB's losses are seen as reflecting weak investor sentiment in the capital market. Meanwhile, continued losses at gas and power distribution firms also point to structural constraints, pricing issues and operational inefficiencies.

Signs of recovery in select firms

Power Grid Company of Bangladesh staged a strong turnaround, posting a profit of Tk94 crore, compared with a loss of Tk186 crore in the same period last year. Revenue rose to Tk715 crore.

The company said earnings per share increased by Tk6.58 year-on-year in the third quarter. It attributed the improvement to a significant rise in total income and a sharp reduction in overall expenses.

Bangladesh Submarine Cable Company Limited (BSCCL) also recorded robust growth, with profit rising to Tk74.43 crore from Tk47.82 crore a year earlier. Revenue increased to Tk125.31 crore.

The company said higher revenue from regular operations and increased other income drove the rise in earnings per share.

Eastern Lubricants Blenders Limited maintained its growth momentum, posting a profit of Tk4.28 crore, up from Tk1.57 crore a year earlier. Revenue climbed to Tk23.95 crore.

The improvement seen in companies such as Power Grid and BSCCL suggests that effective management, rising demand and supportive policies can enable state-owned enterprises to regain financial stability.

After the onset of the US-Israel war on Iran, some policymakers initially took a firm stance, publicly claiming credit for not adjusting fuel prices to shield consumers from global shocks. They argued that they did not want to pass the burden onto the people.

However, the government could not maintain its stance as it quickly unravelled under fiscal and market realities.

Within weeks, the government reversed course. It raised the price of a 12 kg liquefied petroleum gas (LPG) cylinder by 45 percent after two successive hikes in April.

On April 18, it also pushed fuel prices to record highs: diesel rose by Tk 15 per litre to Tk 115, octane by Tk 20 to Tk 140, petrol by Tk 19 to Tk 135, and kerosene by Tk 18 to Tk 130.

The scale and timing of these adjustments suggest that fiscal constraints, subsidy pressures, and external account vulnerabilities outweighed earlier political commitments.

From a macroeconomic perspective, such hikes drive costs and thus prices of commodities in the supply chain, as higher energy costs spread through transport, production, and supply chains, often creating second-round effects in import-dependent economies like Bangladesh.

A recent report on inflation dynamics of Bangladesh by the central bank showed gas price hikes have pushed up energy inflation to 14.9 percent during the January-March quarter of the current fiscal year 2025-26 from 14.4 percent in the previous quarter.

Economists say the effect of hiking petroleum prices is going to be felt soon, and consumers have already begun to feel the pinch. Transport costs for both passengers and freight have gone up. Farmers complained about the higher cost of harvesting rice and threshing the grains. Consumer goods companies are reducing pack sizes and squeezing margins to cope.

Yet, two ministers -- finance and commerce -- downplayed the inflationary risks.

According to a report published in this newspaper on April 20, Finance Minister Amir Khosru Mahmud Chowdhury said, “It may increase or it may not. If the supply side remains stable, then prices may not rise.”

In reply to a question in the parliament, Commerce Minister Khandakar Abdul Muktadir said it was unlikely that the recent fuel price hike would exacerbate inflation, terming the adjustment “moderate.”

He said the 15 percent increase in diesel prices may raise commodity prices by around Tk 0.30 per kg. However, he said this would not have any major impact on overall inflation, which has remained around 9 percent for more than three years, deepening consumers’ woes.

The wage rate index for unskilled workers illustrates this trend. Inflation has outpaced wage growth for 50 consecutive months, steadily eroding the purchasing power of consumers, particularly those in middle- and lower-income groups. It means that real wages have been in the negative for more than four years.

Consumers are set to face further pressure as the commerce ministry has allowed refiners to raise soybean oil prices by Tk 4 per litre, or 2 percent.

The situation worsened by earlier supply disruptions triggered by the Iran War, which had already pushed up global energy and transport costs. Diesel-dependent sectors such as agriculture, manufacturing, and transport are now under additional pressure, raising concerns that the increased costs will eventually be passed on to consumers in an already high-inflation economy.

Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), said the recent fuel price hike is likely to ripple across the economy through a “multiplier effect.”

He noted that fuel acts as a “barometer of commodity prices,” meaning its increase will inevitably influence a wide range of goods, though not uniformly.

He explained that the current situation reflects “cost-push inflation,” driven by rising input costs rather than demand.

However, he cautioned against overstating the scale of the impact, emphasising that the extent of price increases will depend on how significant fuel costs are within each product’s overall cost structure.

“If fuel accounts for a portion of total costs, a 15 percent increase in fuel prices does not translate into a 15 percent rise in final prices,” he said, illustrating that the actual effect would be proportionally smaller.

Rahman stressed that while some level of price increase is unavoidable, the degree to which it affects consumers will depend heavily on market behaviour and oversight.

“The pass-through to retail prices depends significantly on market management,” he said, warning that unchecked responses, such as transport operators raising fares disproportionately, could worsen inflationary pressures.

He also underscored the growing importance of regulatory monitoring, particularly in sectors with administered pricing, and highlighted the need for stronger safeguards for vulnerable groups.

“For low-income people, even a small increase in prices creates significant hardship,” he said, adding that effective implementation of social safety measures will be critical to easing the burden.

Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development, echoed similar concerns, warning that higher energy prices would inevitably feed into overall price levels.

“If energy and oil prices increase, our price levels will increase. This is almost inevitable,” he said. “There is a ‘one-to-one’ correspondence, as the transmission channel is very deep.”

He explained that a fuel price increase typically triggers broader inflationary pressures across the economy.

“When oil prices increase, we’ve seen a 15-20 percent increase across different varieties. It exerts pressure on other supply chain elements, which overall impacts our prices. They might be saying it for political reasons, but the economic reality is that this will fuel inflationary pressure further,” he added.

Razzaque also noted that the impact is more severe in Bangladesh compared to other countries due to already elevated inflation.

“It’s not just happening in Bangladesh; many countries have already increased their fuel prices. The problem for Bangladesh is that our baseline inflation rate was already high, hovering around 9 to 10 percent. When this impact is added, it creates even more pressure. In countries like Cambodia, where inflation was lower, it was easier to absorb. But for us, it’s almost inevitable that prices will go up,” he said.

He also raised concerns over inflation measurement, especially LPG pricing. He said the Bangladesh Bureau of Statistics (BBS) relies on government-set rates, which may not reflect market reality.

Razzaque added that official figures could be misleading if based on listed prices rather than what consumers actually pay, urging surveys of real market prices for more accurate inflation data.

Paramount Textile, a listed company on the bourses, reported a year-on-year revenue decline of more than 15% in the first nine months of the current fiscal year, according to its consolidated quarterly financial statements.

Despite a nosedive in revenue, the company posted a slight increase in profit to Tk96.81 crore, compared with Tk96.41 crore in the same period last fiscal year. However, earnings per share (EPS) slightly dipped to Tk5.14 from Tk5.22.

The company said its operating profit fell 14% amid the revenue contraction. Still, higher income from other sources and gains from associate companies helped offset the decline, enabling Paramount Textile to register a modest profit growth during the July–March period.

Its report showed that its profit from associates companies surged 250% to Tk36 crore while its other income jumped by 631% to Tk10.81 crore.

It has investment in associates' companies—Paramount BTrac Energy Ltd, a 200 MW HSD power plant and Dynamic sun energy Pvt Ltd, a joint venture company between Paramount Textile Ltd and Global energy project holdings (GEPH).

According to its financial report, in the third quarter during the January to March, its revenue fell by 30% to Tk245.71 crore, a lower from Tk354.01 crore in the same time of the previous fiscal year.

Despite 25% declining in its operating profit, net profit surged 6% to Tk52.65 crore mainly due to increase in share of profit of associates companies.

In the three months, it earned Tk15.79 crore from its associates.

In FY25, Parmount Textile made a profit of Tk116.06 crore with an EPS of TK6.48. It had paid a 12% cash dividend for its shareholders.

Paramount Textile's shares closed at Tk61.60 each today (4 May) at the Dhaka Stock Exchange (DSE), a 2.38% down from the previous trading session.

Bangladesh’s total public debt burden has crossed Tk 22 lakh crore by December 2025 with a growing reliance on domestic sources as the government looks to “insulate the economy from foreign currency risks”.

Of the total debt, Tk 3 lakh crore was borrowed during the interim government period, according to the finance ministry’s latest quarterly bulletin.

The bulletin states the public debt stood at Tk 18.9 lakh crore at the end of June 2024, just a month before the interim administration assumed power. The figure was Tk 13.44 lakh crore at the end of June 2022.

During the interim period, domestic debt rose by Tk 1.70 lakh crore, reaching Tk 12.5 lakh crore by December. Foreign loans increased by Tk 1.47 lakh crore to Tk 9.59 lakh crore in the same period.

Domestic borrowing dominates the government’s overall debt portfolio. As of December 31, 2025, the domestic and external liabilities constituted 57 percent and 43 percent of the total government debt stock, respectively.

“By focusing on the local market, the government is deepening domestic liquidity while reducing its exposure to exchange rate fluctuations,” said the bulletin.

During the July-December period of the current fiscal year, the government’s total borrowing rose by Tk 62,428 crore, or 13 percent, compared to the same period a year earlier.

During the period, loans from the foreign sector dropped by 59 percent to Tk 10,130 crore, while domestic borrowing surged 70 percent to Tk 52,298 crore.

Of the domestic borrowing, Tk 19,470 crore was borrowed from the central bank alone.

Most of the domestic loans were raised through government securities. “A key feature of the government’s approach was a clear shift toward long-term debt,” the finance ministry said.

Meanwhile, total interest payment during the July-December period rose by 22 percent to Tk 71,253 crore. Of these, interest payment for domestic borrowing stood at Tk 61,866 crore, a 25 percent surge from the same period a year ago.

While increased domestic borrowing often raises concerns about “crowding out,” the current landscape suggests a unique window of opportunity, said the ministry.

It argued that ample liquidity in stronger banks, falling yields on government securities, and subdued private-sector credit demand create conditions for sustainable domestic financing without crowding out private borrowers.

By leveraging this internal liquidity, the state is building a more resilient and self-reliant fiscal framework that maintains stability without straining the private credit market, it added.

The country's premier bourse returned to positive territory today as a wave of bargain hunting helped the benchmark index snap a two-session losing streak, although overall market capitalisation fell by Tk5,000 crore.

Despite lingering concerns over global geopolitical dynamics and domestic economic factors, opportunistic investors moved in to accumulate beaten-down scrips, particularly in the banking and manufacturing sectors.

The benchmark DSEX index of the Dhaka Stock Exchange rose by 12 points to settle at 5,277, while the blue-chip DS30 index followed suit, gaining 4 points to close at 2,023.

Market participation showed signs of improvement as total turnover at the DSE climbed by 6% to reach Tk877 crore compared to the previous session.

According to the daily market review by EBL Securities, the capital bourse staged a modest rebound supported by resilient investor participation. The market opened on a firm note with steady accumulation through the mid-session.

However, the upward momentum was somewhat tempered toward the end of the day as cautious selling from some quarters trimmed intraday gains.

Interestingly, while the key indices rose, the overall market capitalisation at the DSE dropped by Tk5,000 crore to settle at Tk6.81 lakh crore, a phenomenon largely attributed to the price adjustment of high-cap stocks.

On the sectoral front, the banking sector dominated market activity, accounting for 19.1% of the total turnover. This was followed by the engineering and pharmaceutical sectors, which contributed 12.5% and 12.4% to the day's volume, respectively.

In terms of returns, the ceramic sector led the gainers with a 3.1% increase, followed by jute at 2.9% and information technology at 1.5%. On the downside, the general insurance, mutual fund, and food sectors faced corrections, with general insurance declining by 1.0%.

The market breadth remained slightly in favour of the bulls, as 174 issues advanced compared to 159 that declined, while 63 remained unchanged.

Individual stock performance was highlighted by JMI Syringe and JMI Hospital, both of which surged by nearly 10% to lead the gainers' list.

On the other hand, City Bank emerged as the top loser of the day, shedding 13.33% of its value.

However, market analysts noted that this sharp decline was due to the technical adjustment of its share price following the record date for its 15% stock dividend declaration for the year 2025.

The positive sentiment was partially mirrored at the Chittagong Stock Exchange (CSE), where the CSCX index ended 6 points higher at 9,093. However, the CASPI edged down by 4 points to settle at 14,783.

Trading activity at the port city bourse saw a significant contraction, with turnover plunging by 59% to stand at a modest Tk16.77 crore.

Oil prices edged higher on Monday, supported by the absence of a US-Iran peace deal that kept supplies constrained and prices above $100 a barrel.

Brent crude futures were up 67 cents, or 0.6%, to $108.84 a barrel at 0400 GMT after settling down $2.23 on Friday. US West Texas Intermediate was up 65 cents, also 0.6%, at $102.59 a barrel, after a $3.13 loss on Friday.

"The broader market remains tightly supported by persistent supply disruptions and geopolitical uncertainty," said Priyanka Sachdeva, analyst at Phillip Nova.

"Unless there is a clear and sustained resolution that restores normal flows through the Strait of Hormuz, oil prices are likely to remain elevated, with risks still tilted toward further upside."

President Donald Trump said the US would begin efforts to assist ships stranded in the Strait of Hormuz, but prices stayed above $100 a barrel, with no peace deal in sight and shipping through the strategic waterway still constrained.

Negotiations between the US and Iran continued over the weekend, with both sides assessing each other's responses.

Trump has made securing a nuclear deal with Tehran a priority, but Iran wants to defer nuclear talks until after the war and first lift rival blockades on Gulf shipping.

On Sunday, the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, said it would raise oil output targets by 188,000 barrels per day in June for seven members, marking the third consecutive monthly increase.

The rise matches that agreed for May, minus the share of the United Arab Emirates, which left OPEC on May 1. However, the additional barrels are expected to remain largely on paper as long as the Iran war continues to disrupt Gulf oil supplies through the Strait of Hormuz.

Mobile operators have called on the National Board of Revenue (NBR) to withdraw value-added tax (VAT) on spectrum and spectrum-related fees, arguing the levy contradicts global norms and undermines investment in the sector.

In a recent letter sent to the NBR chairman, the Association of Mobile Telecom Operators of Bangladesh (AMTOB) described the proposed withdrawal as a vital step to rectify a fundamental misalignment in Bangladesh’s VAT regime.

The association said radio spectrum, the finite range of frequencies over which all wireless communication travels, is an intangible national resource administered by the Bangladesh Telecommunication Regulatory Commission (BTRC).

“Its [radio spectrum] assignment, renewal, and usage confer a sovereign regulatory right -- not a commercial supply of goods or services under any legal interpretation,” wrote Mohammad Zulfikar, the association’s secretary general.

Hence, imposing VAT on spectrum and spectrum fees, AMTOB argued, effectively turns a regulatory charge into a taxable transaction.

“Imposing VAT here transforms a non-commercial regulatory grant into an artificial taxable event,” it added.

According to the letter, telecom companies are required to pay VAT on spectrum fees without being able to claim input tax credits, increasing operational costs.

It said the BTRC’s lack of VAT registration prevents it from issuing standard invoices. “This renders the VAT non-creditable and traps it as a pure cost to the operators.”

AMTOB warned that the arrangement stifles network investment, 5G rollout, and rural coverage expansion.

It cited frameworks in the European Union, India, the United Kingdom, and Australia, where spectrum charges are treated as sovereign regulatory fees outside the VAT net.

“Bangladesh’s current approach deviates from this consensus, creating indefensible inefficiencies,” the letter said.

The association noted that the sector already carries a heavy tax burden -- corporate income tax, BTRC revenue sharing, spectrum and licence fees, and VAT on services.

“In 2024, we contributed approximately Tk 22,000 crore,” the letter noted, warning that additional non-creditable taxes could affect affordability and innovation in the sector.

In the letter, AMTOB placed two demands before the tax authority: the immediate withdrawal of VAT on spectrum-related payments, and formal clarification categorising these charges as sovereign regulatory fees outside the VAT net.

Shahed Alam, chief corporate and regulatory officer at Robi Axiata, said, “Treating spectrum fees as VAT-exempt regulatory charges, in alignment with global best practices, would restore tax neutrality, reduce financial pressure, and improve cost efficiency.”

Reckitt Benckiser Bangladesh, a listed multinational on the bourses, reported a 9.99% year-on-year decline in revenue and a 28.31% drop in net profit after tax in the first quarter of 2026.

During the January to March quarter, its revenue declined to Tk132.61 crore, a lower from Tk147.34 crore, while its profit declined to Tk10.99 crore, a lower from Tk15.33 crore in the same time of the previous year, its report showed.

At the end of March 2026, its earnings per share (EPS) declined to Tk23.26, which was Tk32.45 in the same time of the previous year.

The quarterly financials published today (3 May) on the stock exchanges. Following the financials results, the company's shares fell 2.69% or Tk93.4 each closed at Tk3,377 each at the Dhaka Stock Exchange (DSE).

In 2025, Reckitt Benckiser reported a profit of Tk81.71 crore with an EPS of Tk172.93, which was Tk75.20 crore and EPS of Tk159.17 in 2024, its data showed.

Based on its financials, its board recommended a 1,730% final cash dividend meaning that Tk173 against each shares.

To approve its financials and dividend by the general shareholders, the MNC scheduled its annual report on 29 June thorough the digital platform.

Reckitt Benckiser had paid a record-high 3,330% cash dividend for 2024 to its shareholders.

Reckitt Benckiser (Bangladesh) PLC is a subsidiary of the UK-based Reckitt Benckiser Group plc. It is a well-known manufacturer of health, hygiene, and home products, with several leading brands in Bangladesh.

The company manufactures and marketed of households (hygiene), toiletries and pharmaceutical (health) product.

Reckitt Benckiser is a well-known and trusted company in Bangladesh's FMCG sector. It offers a wide range of products, including Dettol, Harpic, Lizol, Trix, Mr Brasso, and Veet.

As of March this year, out of its total shares, sponsor-directors held 82.96%, government 3.77%, institutional shareholders 6.80%, foreign 0.01% and general public held 6.46%.

Most listed drug manufacturers in Bangladesh posted double-digit year-on-year profit growth in the first nine months through March, supported by rising demand, efficient cost management, and a stable forex market. Bangladeshmarket report
FE

Market analysts attributed the growth to higher sales volumes, improved operational efficiency, and sustained demand for medicines both domestically and in export markets.

The sector's performance stands out at a time when many other industries-including multinational companies-are grappling with elevated operating costs amid persistent inflationary pressure.

"Sales of lifesaving drugs increased due to strong local demand, while leading companies successfully managed to keep operating costs lower," Salim Afzal Shawon, head of research at BRAC EPL Stockbrokerage, told The Financial Express over the phone.

The growing population, coupled with rising awareness of healthcare needs, has amplified demand for generic medicines in the local market, particularly for chronic diseases.

The aftermath of the Covid-19 pandemic has further underscored the importance of healthcare, leading to a heightened focus on medical preparedness and infrastructure, which in turn has positively impacted the pharmaceutical industry.

"People now prioritise healthcare spending more than before, which is contributing to higher sales and profitability," said Mr Shawon. Marketupdate service

This resilience allows leading pharmaceutical companies to sustain strong revenue and profit growth, he added.

Combined profits of eight major drug manufacturers rose nearly 14 per cent year-on-year to Tk 27.22 billion during July-March of FY26. Over the same period, total sales increased 13 per cent year-on-year to Tk 155 billion.

Among the eight, Techno Drugs and Silco Pharma saw their profits decline, mainly due to lower sales and higher finance costs.

Silco Pharma's profit fell 19 per cent year-on-year in the nine months through March, as its finance costs more than doubled to Tk 170 million due to increased borrowing.

Techno Drugs' profit also dropped 16 per cent due to lower sales and higher tax expenses. Its sales declined 10 per cent year-on-year, while tax expenses surged 19 per cent during July-March FY26 compared to the same period a year earlier.

Beximco Pharma and Navana Pharma have yet to publish their third-quarter financial results. Financialdata analytics

Overall, the pharmaceutical sector has remained resilient despite broader economic challenges such as inflationary pressure and rising production costs.

Square Pharma, the country's largest drug maker, posted a 10 per cent year-on-year increase in profit to Tk 20.64 billion for the nine months through March. Revenue rose 12.5 per cent to Tk 65.08 billion.

The company attributed the sustained growth to several factors, including rising domestic demand for healthcare products, export earnings, and income from subsidiaries.

Square Pharma's local sales grew by more than 9 per cent, while revenue from its Kenya subsidiary rose 4.5 per cent year-on-year during the period.

The company also reduced its finance costs by 55 per cent, supported by the partial repayment of long-term loans.

"The drug maker continues to grow in both sales and profit owing to strong consumer trust in its products," said Akramul Alam, head of research at Royal Capital.

He highlighted Square Pharma's competitive edge in producing high-quality generic medicines at relatively low costs, supporting its long-term growth trajectory. Globalmarket forecast

Another leading drug manufacturer, Renata, posted 28 per cent year-on-year profit growth in the first nine months through March, driven by strong operating profit and reduced finance costs following a capital restructuring initiative.

"Profitability improved on the back of better gross margins, efficient procurement, and tight control over expenses, including lower financing costs through major capital restructuring," said the company.

"We successfully lowered finance costs by deploying the proceeds from preference share issuance to retire high-cost debts, a move that has structurally reduced our interest burden going forward," Mustafa Alim Aolad, chief financial officer of Renata, told The Financial Express over the phone recently.

Renata's domestic sales, which account for almost 74 per cent of total revenue, grew by more than 10 per cent, while export revenue rose 5 per cent, aided by a wave of international regulatory approvals.

Beacon Pharmaceuticals recorded the highest profit growth among its peers, registering a 59 per cent year-on-year increase. The growth was driven by higher sales, lower input costs, efficient production planning, and prudent financial management, the company said.

IBN Sina Pharmaceutical Industry also posted strong results, with profit rising 33 per cent and sales increasing 18 per cent, backed by solid operational performance.

Meanwhile, although Advanced Chemical Industries (ACI) remained in the red, its pharmaceutical segment posted 21 per cent year-on-year sales growth during the period under review. Its consolidated losses shrank to Tk 71 million in July-March of FY26, one-eleventh of the losses recorded during the same period of the previous year.

Bangladesh's pharmaceutical industry, which meets 98 per cent of local demand, remains one of the country's success stories, having recorded remarkable growth in recent years. Bangladeshmarket report

Export performance has also remained steady. Pharmaceutical exports reached $170.67 million in the first nine months of FY26, marking growth of more than 3 per cent, driven largely by demand from Asian markets such as Sri Lanka and Myanmar.

Mr Alam said that with continued investment, regulatory compliance, and a growing skilled workforce, the local pharmaceutical sector is poised not only to sustain but also to accelerate export growth in the coming years.

The Bangladesh Investment Development Authority (Bida) has recently submitted 20 deregulation proposals to the finance ministry, aiming to significantly ease doing business without reducing tax rates.

The proposals, developed through a series of consultations with business leaders, focus on removing procedural bottlenecks, reducing compliance costs, and improving predictability in regulatory processes, Bida officials told The Business Standard.

Business representatives believe that if implemented, the measures would lower operational expenses, save time, and boost investor confidence.

Push for risk-based audit system

A key recommendation is the introduction of a risk-based audit system to replace the current practice of selecting firms for audit without clear criteria.

At present, companies are often subjected to repeated audits immediately after submitting their audited financial statements, leading to complaints of unnecessary harassment.

Under the proposed system, the National Board of Revenue would use predefined risk parameters – such as abnormal fluctuations in turnover, inconsistencies in input-output ratios, and repeated refund claims – to automatically identify firms with a higher likelihood of tax evasion.

This "automated audit selection" process would allow authorities to focus enforcement on high-risk cases while reducing pressure on compliant taxpayers.

Reducing reliance on LCs, promoting digital trade

The report suggests reducing dependence on traditional Letters of Credit (LCs) by introducing alternative digital payment and settlement methods. Such reforms could make international trade faster and more cost-effective.

Customs reforms and global benchmarking

Bida has also recommended improving transparency in customs valuation by integrating international price databases alongside domestic references.

To illustrate best practices, the proposals cite VNACCS – Vietnam's automated cargo clearance system – which uses real-time data and reference pricing. Under that model, goods declared within an acceptable price range are cleared automatically through a "green channel," significantly reducing delays.

Adopting similar mechanisms could streamline Bangladesh's customs procedures, cut bureaucratic complexity, and shorten clearance times, according to the proposals.

24/7 port operations to cut logistics costs

Business leaders identified limited port operating hours as a major constraint. Despite growing trade volumes, full-scale 24/7 operations are not consistently available due to restrictions in banking and customs services.

Bida has recommended round-the-clock port operations, which could help reduce congestion and lower logistics costs.

In addition, the proposals suggest allowing up to 80% of import clearance through off-dock facilities in phases, supported by regular audits and risk-based monitoring to ensure compliance.

Concerns over indiscriminate audit, AIT

Speaking to TBS, Business Initiative Leading Development Chairperson Abul Kasem Khan said even long-compliant taxpayers frequently face repeated audits, creating uncertainty and discouragement.

"We have seen cases where companies with a strong compliance record and even recognition as top taxpayers are repeatedly audited. This undermines confidence," he said.

Kasem, who was a former president of the Dhaka Chamber of Commerce and Industry, also highlighted concerns over Advance Income Tax (AIT), noting that in many cases businesses pay more tax than their actual liability, with refunds delayed.

"As a result, the effective tax rate can rise to 40-50%, putting pressure on working capital," he said, adding that excess payments should either be refunded quickly or adjusted against future tax liabilities.

NBR signals support for easing compliance

Addressing a consultative committee meeting organised by the NBR and the FBCCI last week in Dhaka, Finance Minister Amir Khosru Mahmud Chowdhury, said the government is committed to dismantling the existing regulatory barriers to doing business.

NBR Chairman Abdur Rahman Khan recently said the government is focusing not only on tax rates but also on simplifying business processes.

"Our priority is to reduce unnecessary complexities and make compliance easier so that businesses can operate more efficiently," he said at a pre-budget discussion.

Bangladesh needs a decisive push to mobilise revenue by immediately launching reform measures, accelerating automation, and gradually phasing out existing tax exemptions, said economists and policymakers at an event organised by the National Citizen Party (NCP) yesterday.

The national convention on energy, economy, human rights, reform and referendum was held at the Institution of Diploma Engineers in Dhaka.

“Many discussions were held and numerous committees formed, but we saw no meaningful progress in the revenue sector,” said M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh.

“No reforms took place during the Awami League era, and unfortunately, the interim government also failed to act. A new government is now in place and may need time, but if reforms are not launched within the next two to three months, we risk losing this opportunity again,” he added.

Reaz described the country’s economic challenges as a “four-plus-one dimension”-- four domestic weaknesses alongside one global factor.

He said the country’s key drivers of employment and growth have stalled, while economic governance had largely collapsed before August 5, marked by banking irregularities, oligarchic control in energy, and mismanagement of public spending.

He also pointed to the absence of revenue reform, failure to formalise the informal economy, and rising dependence on external debt as major concerns.

At the event, Hasnat Abdullah, lawmaker and chief organiser (Southern Region) of the NCP, said that automating tax and customs systems through cashless, paperless processes integrated with NID is now essential.

He noted that complexities in the current manual tax system discourage compliance.

“If we automate the system and integrate it with NID, under-the-table compromises can be reduced to near zero. Many European countries have been practising this for years,” he said.

AKM Waresul Karim, dean of the School of Business and Economics at North South University, said governance failures have driven stagnation in the banking sector.

“Corruption, nepotism, politicisation, and prolonged authoritarian practices have undermined institutional integrity,” he said.

Confidence in state-owned commercial banks has eroded, he noted. Citing a review of Janata Bank, he said 70 percent of its loans are non-performing. Following recent political upheaval, the boards of a number of banks were reconstituted, and a Bank Resolution Ordinance was introduced, merging five banks.

However, he criticised the provision allowing previous bank owners to reclaim ownership by repaying only 7.5 percent of government liquidity support, calling it a tactic to restore control to specific individuals.

AKM Fahim Mashroor, CEO of Bdjobs, said overall unemployment in Bangladesh remains below 4 to 5 percent, but youth unemployment is three to four times higher. Each year, about 700,000 graduates enter the job market, of whom 50 to 60 percent remain jobless.

“Unemployment is not just an economic issue-- it is a social and political one,” he said, adding that high interest rates and energy constraints may deter investment in the near term.

He suggested promoting entrepreneurship and facilitating overseas employment through government-backed loans.

Sarjis Alam, chief organiser (Northern Region) of the NCP, chaired the first panel discussion. Shams Mahmud, former president of the Dhaka Chamber of Commerce, Chartered Financial Analyst Asif Khan, and Javed Rasin, joint convener of the NCP, also spoke at the event.

Advanced Chemical Industries (ACI) PLC is set to further diversify its business portfolio by entering the stationery market through a joint venture with the Chinese industry leader, Deli Group.

In a regulatory filing on Thursday, the local conglomerate informed that its board of directors approved the formation of a new company titled "Deli ACI Bangladesh Limited" in a meeting held on 29 April. The joint-venture entity will have an authorised capital of Tk100 crore and an initial paid-up capital of Tk27 crore.

ACI PLC will hold a 50% stake in the new venture, with the partnership remaining subject to the approval of the relevant regulatory authorities.

The collaboration aims to combine Deli's international expertise in stationery manufacturing with ACI's extensive local market knowledge and its massive nationwide distribution network.

The company stated that the venture will introduce a wide range of stationery solutions for students, professionals, and creative users, focusing on functionality, durability, and contemporary design while meeting both global standards and local demand.

Founded in 1981, Deli Group is a prominent Chinese stationery manufacturer. As of October 2018, it was recognised as the largest stationery manufacturer in Asia. The group operates several global sub-brands, including Deli Tools, Deli Plus, Deli Genius, Agnite, Nusign, and Dmast, focusing on office and school supplies.

This move marks ACI's fifth major international partnership. At present, the conglomerate operates four successful joint-venture companies: pladis ACI Bangladesh Limited (with the UK's pladis), ACI Godrej Agrovet Private Limited (with India's Godrej), ACI CO-RO Bangladesh Limited (with Denmark's CO-RO), and Colgate-Palmolive ACI Bangladesh Private Limited (with the US-based Colgate-Palmolive).

A total of 197 listed companies in Bangladesh's stock market have failed to comply with the requirement of appointing at least one woman independent director in their boards, according to the Bangladesh Securities and Exchange Commission (BSEC).

Out of 360 listed firms, 163 companies (around 45%) have complied with the directive over the past one and a half years. However, another 66 companies have not responded to the regulator's directive at all.

Among the remaining companies, 131 firms have requested additional time from the Bangladesh Securities and Exchange Commission (BSEC) to comply with the requirement.

BSEC has instructed the non-compliant companies to complete the appointment of women independent directors by 30 June, 2026, in line with the Corporate Governance Code, 2018. The commission has also warned that legal action will be taken against companies that fail to meet the requirement within the deadline.

The instruction was reiterated in a meeting held with company secretaries of non-compliant listed firms. The meeting emphasised strict enforcement of the rule and urged companies to take immediate steps.

According to the amended gazette issued on 29 April, 2024, every listed company is required to appoint at least one woman independent director to ensure better governance and board diversity. Initially, companies were given one year to comply, which was later extended to December 2025. However, as several firms still failed to meet the requirement, the deadline has now been pushed further to June 30, 2026.

BSEC has urged companies to select qualified female professionals from diverse backgrounds for the role. Suggested categories include business leaders, corporate professionals, members of business associations, university teachers, government officials (serving or retired), professionals with relevant degrees, and lawyers from the High Court Division.

BSEC officials stated that increasing women's participation in corporate boards is essential for strengthening corporate governance. They believe it will improve transparency, accountability, and diversity in decision-making processes within listed companies.

At the same time, some market stakeholders argue that a shortage of experienced female professionals in certain sectors is creating challenges for companies. Many firms, especially in manufacturing industries, still operate under traditionally male-dominated board structures, making the transition slower.

However, experts counter that qualified female professionals are widely available in banking, insurance, academia, legal practice, and public administration. They argue that lack of initiative, rather than shortage of talent, is the main reason behind the delay.

BSEC Commissioner Farzana Lalarukh had earlier noted that many companies are still not complying with the mandatory requirement, indicating weak corporate governance practices. She also pointed out issues such as irregularities in appointing company secretaries and the dominance of family-controlled boards, which often limits the effectiveness of independent directors.

She further mentioned that social and family barriers also discourage women from taking leadership roles in corporate boards. The commission is working to develop a stronger pool of qualified women directors and is also considering possible flexibility in appointment policies if needed.

According to BSEC officials, some companies have not prioritised compliance, while using the excuse of not finding suitable candidates.

Industry observers note that ensuring women representation at the board level is not just a compliance requirement but a key part of effective corporate governance. It can improve risk management, ethical standards, and long-term strategic decision-making.

BSEC has already indicated that after 30 June, strict enforcement measures will be taken against non-compliant companies. These may include warnings, monetary penalties, and other administrative actions under securities laws.

Company secretaries attending the meeting were instructed to complete the appointment process within the deadline and formally report compliance to the commission.

Bangladesh's merchandise exports showed signs of a strong turnaround in April, snapping eight months of subdued performance with a sharp 32.92% year-on-year growth.

According to data released by the Export Promotion Bureau (EPB) today (3 May), the recovery was driven largely by a rebound in garment shipments and improving buyer confidence following the national elections.

Export earnings rose to $4.01 billion in April, up from $3.02 billion in the same month last year. On a month-on-month basis, shipments also increased by 15.20% from $3.48 billion in March.

The April performance marks one of the strongest monthly gains in recent times, suggesting that export orders – particularly in key markets – are beginning to recover after a prolonged slowdown.

However, the broader picture remains mixed.

In the first 10 months of the current fiscal year (July-April), total export earnings stood at $39.40 billion, down 2.02% from $40.21 billion in the same period a year earlier. This indicates that while recent gains are significant, they have yet to fully offset earlier declines.

Exporters attributed the surge to a combination of a low base effect from last April and renewed buyer confidence following the elections.

Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), attributed the increase to two primary drivers.

"First, last year's Eid-ul-Fitr fell on 31 March, with holidays extending through 6 April, which significantly curtailed exports during that period. Compared to that low base, this year's full month of uninterrupted operations naturally resulted in much higher figures," he told TBS.

He further noted that many international buyers had taken a "wait-and-see" approach ahead of the national elections in February. "Following a credible election, buyer confidence has stabilised, positively impacting April's earnings," Mahmud said.

According to the BGMEA president, while the data shows a massive spike, organic export growth for April sat closer to 8-10%. He cautioned that May is unlikely to replicate this performance due to the upcoming Eid-ul-Azha holidays but expressed optimism for a rebound in June, provided geopolitical tensions in the Middle East subside.

Garment sector drives recovery

The ready-made garment (RMG) sector, the backbone of the country's export economy, once again led the recovery.

RMG exports rose 31.21% year-on-year to $31.72 billion during the July-April period, accounting for the bulk of export earnings. In April alone, garment shipments climbed to $3.14 billion from $2.39 billion a year earlier, reflecting a strong pickup in orders.

Despite this robust performance, the sector's cumulative earnings remain slightly below the previous year's $32.64 billion.

Fazle Shamim Ehsan, senior vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), also attributed the surge to a post-election boost in buyer confidence and seasonal demand.

He noted that lower order volumes in previous months had depleted buyer inventories, while April and May are traditionally peak periods for winter garment shipments, both of which fuelled the April boost.

However, Ehsan cautioned that growth in May could be dampened by Eid-ul-Azha holidays, and that a slowdown in new orders may affect momentum from June onward, depending largely on geopolitical developments in the Middle East.

However, BKMEA President Mohammad Hatem said the recent spike largely reflects deferred shipments from March rather than a surge in fresh orders.

He explained that March exports dipped because factories closed for 10 days during Eid-ul-Fitr, causing production backlogs that were finally cleared in April.

"To our knowledge, factories have not seen unusually high additional orders or a sudden influx of new buyers," Hatem said.

He warned that exports could face renewed pressure later this month as another holiday period threatens to disrupt production schedules again. "To understand the true export trend, we must wait until July. While temporary increases may persist through June due to shipment adjustments, the actual picture will only become clear then."

Uneven recovery beyond garments

Beyond garments, however, the export earnings remain uneven.

Non-RMG sectors, including primary commodities and several manufacturing segments, have yet to show a comparable recovery, dragging down overall export growth. EPB data suggests that while some categories posted modest gains in April, their contribution remains limited and volatile.

Market-wise, the recovery appears broad-based.

Exports to major destinations such as the United States and the United Kingdom recorded strong year-on-year growth, while all of Bangladesh's top 20 export markets posted positive gains in April. This indicates a gradual normalisation of demand across key regions after months of contraction.

Still, a trade economist cautions against reading too much into a single month's performance.

"The April numbers are encouraging, but the key question is whether this momentum can be sustained," said Dr Mohammad Abdur Razzaque, chairman of RAPID, a private think tank. "Sustaining this pace of growth will be challenging."

Razzaque, also a trade economist, noted that the strong April performance may partly reflect a low base effect, as export earnings in April last year were relatively weak.

The price of a 12kg cylinder of liquefied petroleum gas (LPG) remains unchanged at Tk 1,940 for May.Business Policy Updates
FE

The Bangladesh Energy Regulatory Commission (BERC) announced the decision on Sunday, which would take effect from 6 pm. Bangladeshmarket report

The LPG prices were adjusted twice last month.

On April 2, the price of the 12kg cylinder was raised by Tk 387 to Tk 1,728. Later, on April 19, BERC hiked the price by Tk 212, setting it at Tk 1,940.

The private sector can sell LPG in various cylinder sizes-5.5kg, 12.5kg, 15kg, 16kg, 18kg, 20kg, 22kg, 25kg, 30kg, 35kg and 45kg-to consumers at proportional price in May.

The price of LPG supplied through a reticulated system or centralised storage system also remains unchanged at Tk 351 per cubic metre for May.

Meanwhile, the consumer-level price of autogas has been slightly increased by 2 paisa for May, setting the new price at Tk 89.52 per liter, including value added tax (VAT).

Autogas prices were also adjusted twice last month.

On April 2, the price was raised by Tk 17.94 to Tk 79.77 per liter. On April 19, BERC increased the price by Tk 9.73, fixing it at Tk 89.50 per liter.

United Commercial Bank (UCB) secured a whopping 198 per cent year-on-year increase in consolidated profit to Tk 238 million in 2025 as it reaped handsome returns from investment income.
FE

Investment earnings, including income from Treasuries, subordinated bonds, other private sector bonds, and investments, more than doubled to Tk 15.2 billion in 2025, according to the company's latest financial statement.

However, net interest income declined due to a sharp rise in interest expenses in a high-rate environment.

Deposits surged 23 per cent year-on-year to a historic Tk 683.9 billion, more than double the sectoral average growth.

UCB added nearly 678,000 new accounts during the year, including a large number of savings and current accounts, strengthening its retail base, which now accounts for 59 per cent of total deposits.

Agent banking also contributed steadily, with higher average deposits per outlet.

Stronger deposit inflows improved liquidity, bringing down the advance-deposit ratio to 83 per cent from over 91 per cent a year earlier.

Excess liquidity was channelled into low-risk government securities, pushing such investments up by 69 per cent year-on-year in 2025 to more than Tk 148 billion. Total assets expanded by 14.5 per cent to more than Tk 884 billion.

Loan growth remained measured at 8 per cent, reflecting a cautious approach focused on asset quality.

While the classified loan ratio stood at 15.5 per cent, the company's management indicated ongoing efforts to reduce stressed assets.

UCB made notable progress in digital transformation. Around 65 per cent of total transactions were processed through digital channels in 2025.

The bank's credit rating remained 'AA' in the long term with a negative outlook, reflecting ongoing pressure from capital and provisioning requirements.

No dividend has been declared for 2025 due to restrictions linked to provisioning shortfall.

Overall, UCB ended the year on a stronger footing, with improved liquidity, expanding digital operations, and steady earnings growth despite a challenging interest rate environment.

Sri Lanka raised fuel prices by nearly 4% today (3 May), further fuelling inflation, which more than doubled last month due to the Middle East war.

Since March, Sri Lanka has raised fuel prices by more than 35%, while gas and electricity rates have also increased by a similar amount.

The island has also rationed fuel following supply disruptions.

Today, the state-owned Ceylon Petroleum Corporation increased the price of kerosene -- used by agricultural machinery -- to 265 rupees ($0.85) a litre, up 10 rupees.

Petrol rose 12 rupees to 410 rupees ($1.32). Diesel was up 10 rupees to 392 rupees.

Higher energy prices pushed inflation to more than double, reaching 5.4% in April, according to official data.

Fuel and electricity tariffs drove up transport costs as well as food prices, the Department of Census and Statistics said.

The island has been slowly emerging from the 2022 economic meltdown, when it ran out of foreign exchange reserves to pay for essential imports such as food, fuel and medicines.

However, it was hit hard in November by a cyclone that killed at least 643 people and affected more than 10% of the island's 22 million population.

The storm caused an estimated $4.1 billion in direct physical damage to buildings and agriculture, according to the World Bank.

The country has been stabilising its fragile economy with the help of a $2.9 billion IMF bailout agreed in early 2023, but high energy prices have seriously challenged recovery efforts.

The Dhaka Stock Exchange (DSE) witnessed a significant retreat today (3 May) as a massive sell-off in the banking sector, triggered by the formal downgrade of ten more lenders to the "Z" category, dragged down the benchmark index.

The premier bourse felt the immediate impact of investor panic as nearly 42% of the country's listed banking sector shifted into the "junk" stock segment, a move that severely eroded market sentiment and tightened liquidity across the floor.

The benchmark DSEX index plunged by 21 points, or 0.40%, to settle the session at 5,265. While the blue-chip DS30 index managed to edge up by a marginal 0.09% to reach 2,018, the broader market breadth remained negative. Out of the 396 issues traded, 180 declined, 165 advanced, and 51 remained unchanged.

Market participation also saw a slight contraction, with daily turnover edging down by 4% to Tk829 crore compared to the previous session.

The day's downturn was almost entirely dictated by the banking sector. Market sources confirmed that ten banks – AB Bank, Al-Arafah Islami Bank, IFIC Bank, Mercantile Bank, NRB Bank, NRBC Bank, One Bank, Premier Bank, Rupali Bank, and United Commercial Bank – were moved to the "Z" category on Sunday.

This followed their failure to declare any dividends for two consecutive years, a direct consequence of persistent financial irregularities and mounting bad loans. This latest wave of downgrades follows a similar move on 30 April, when Islami Bank, Standard Bank, and SBAC Bank were also pushed into the junk category for the same reasons.

Among the newly downgraded entities, Mercantile Bank suffered the most brutal correction, with its share price crashing by 18.18% to close at Tk7.20. AB Bank followed with an 11.32% decline, ending the day at Tk4.70.

Other notable losers included Premier Bank, which shed 8.89% to settle at Tk4.10, and IFIC Bank, which dropped 6.12% to close at Tk4.60. Al-Arafah Islami Bank, NRB Bank, and One Bank also saw their share values erode by more than 4% each. Even the state-owned Rupali Bank recorded a 2.91% price fall.

Consequences of Z category

Analysts said the primary reason behind this unprecedented sector-wide dividend drought is a massive provision shortfall against classified loans and investments. Under Bangladesh Bank regulations, lenders suffering from provision deficits are strictly prohibited from declaring dividends.

To maintain a semblance of regulatory compliance and prepare audit reports, several of these banks have reportedly availed deferral facilities from the central bank. While this allows them to postpone their immediate financial obligations, it does nothing to improve their actual profitability or their ability to reward shareholders, effectively trapping them in the junk category.

The transition to the "Z" category carries severe operational and psychological consequences for a listed firm. These stocks are widely perceived as high-risk assets due to their weak financial health and lack of corporate governance, analysts added.

Furthermore, trading rules for junk stocks are significantly more restrictive. Unlike "A" and "B" category stocks, which follow a T+2 settlement cycle, "Z" category transactions are settled on a T+3 basis.

Additionally, these shares are ineligible for margin loans and are restricted to cash-only transactions. These barriers often lead to a sharp decline in trading volume and liquidity, making it difficult for investors to exit their positions.

With 15 out of the 36 listed banks now trading in the "Z" category, the systemic health of the banking sector has become a major concern for the capital market.

Few outliers

Among the affected lenders, only a few managed to resist the downward trend today. The share prices of UCB and Standard Bank remained unchanged, while NRBC Bank emerged as the sole outlier in the sector, managing to post price appreciation despite the broader sell-off.

The banking rout mirrored the performance of the Chittagong Stock Exchange as well. The CSCX index ended 7 points lower at 9,086, while the CASPI shed 17 points to close at 14,788. Turnover at the port city bourse saw a more pronounced decline of 14%, settling at Tk41.35 crore.

Major index draggers for the day included Mercantile Bank, Shahjalal Islami Bank, Trust Bank, NCC Bank, and Al-Arafah Islami Bank.

NBFIs gain traction

Interestingly, while established banks faced a rout, the gainers' list today was dominated by non-bank financial institutions (NBFIs), many of which are themselves grappling with high non-performing loans and governance crises.

Speculative trading appeared to drive these stocks higher, with Fareast Finance and Bangladesh Industrial Finance Company (BIFC) both hitting the 10% upper limit. Other gainers included International Leasing, Premier Leasing, FAS Finance, and Peoples Leasing.

Market observers described this as a classic case of speculative 'junk-hunting' where investors shift capital into low-priced, volatile stocks following a crash in more fundamental sectors like banking.

The Cabinet has approved a set of tax measures for the import of completely new electric vehicles, including buses and trucks.

The decision was taken at a Cabinet meeting - chaired by Prime Minister Tarique Rahman - held in the Cabinet Room of the National Parliament at 6:45pm on Sunday (3 May), according to a statement from the Cabinet Division.

Under the decision, a notification will be issued to maintain the Value Added Tax (VAT) at 15% for electric buses with a minimum of 17 seats, for use in sectors other than student transportation.

At the same time, these imports will be exempted from customs duty (CD), regulatory duty (RD), supplementary duty (SD), advance tax (AT) and advance income tax (AIT), subject to certain conditions.

According to Cabinet Division sources, the National Board of Revenue will soon issue a notification in this regard. The facility will remain in effect till 30 June 2026 - i.e. the end of the current fiscal year of 2025-26.

It follows an earlier decision to allow the duty-free import of electric buses for educational institutions to promote safe and environmentally friendly transportation for students.

A similar notification will also be issued for the import of trucks with a capacity of five tonnes or more, the statement added.

The initiative was proposed by the Internal Resources Division, the statement said.