US President Donald Trump signed an order Monday to cut tariffs on agricultural equipment, the White House said, as farmers and manufacturers face pressure from surging costs over the Middle East war.

Trump's proclamation reduces the duty rate on machinery like harvesters, alongside certain other equipment, from 25% to 15%.

Foreign companies can also qualify for a 10% duty rate if their manufacturing equipment contains at least 85% US steel or aluminum, the White House added in a fact sheet.

The changes take effect on June 8 and last until December 31, 2027.

Farmers have raised concern over rising costs ahead of key midterm elections, and face a further squeeze from the Middle East war as diesel and fertilizer prices have surged.

US-Israeli strikes targeting Iran since the end of February sparked Tehran's retaliation that virtually blocked off the Strait of Hormuz.

The critical waterway normally sees about a fifth of the world's oil and gas supplies pass through it, and is also essential for the global fertilizer trade.

The blockage has also driven aluminum prices higher as it is a key passageway for deliveries from the Middle East.

"Recent circumstances have affected and are affecting domestic industries that use agricultural equipment, industrial equipment and machinery, and other related products," Trump's order on Monday noted.

It is the latest adjustment to Trump's steel and aluminum tariffs, after firms pushed back on onerous rules.

US tariffs on steel, aluminum and copper generally stand at 50%.

In April, Trump moved to lower tariffs on products deemed to contain substantial amounts of these metals to 25% -- targeting their full value rather than the amount of the metals they contain -- in a bid to simplify the system.

Besides agricultural equipment, Trump's latest order said the lower 15% rate would also apply to certain heating, ventilation and air conditioning systems that are mainly for residential use.

In a striking development for Bangladesh's banking sector, non-performing loans (NPLs) increased by Tk31,000 crore within a three-month period. Compared directly with the December quarter, defaulted loans increased by Tk31,488 crore in the March quarter.

By the end of March this year, total defaulted loans had surged to Tk5,88,704 crore, representing a staggering 32.26% of the total loans disbursed. Currently, the total volume of loans disbursed across the banking sector stands at Tk1,824,668 crore.

Sluggish private credit growth and economic stagnation

The first major factor driving the high ratio of non-performing loans is that private credit growth has slowed down significantly, preventing a meaningful increase in total credit. Private sector credit growth has fallen to 4.72%, indicating that the country's overall macroeconomic situation is not very good.

Businessmen are taking fewer loans from banks to conduct business. Instead of expanding new businesses, they are struggling to repay their previous loans. Furthermore, the fuel crisis caused by the war in the Middle East in March has made it more difficult to do business.

Because of these challenges, the country's large business groups have accepted policy support from the Bangladesh Bank. Therefore, if credit growth in the private sector can be successfully increased, the total amount of defaulted loans will naturally decrease.

Low collection, compounding interest, and auditing shift

Secondly, the volume of defaulted loans has mounted due to a combination of low collection rates and interest added directly to the outstanding debt.

In this regard, Bangladesh Bank spokesperson and Executive Director Arief Hossain Khan told The Business Standard, "Loan collection has decreased. Moreover, interest is levied on loans every quarter, which is why the amount of defaulted loans has increased compared to before."

Third, Bangladesh Bank has utilised qualitative assessment while finalising the financial statements of banks. As part of this approach, certain loans identified during the central bank's inspection and assessment have been formally shown as defaulted, directly contributing to the increase in the overall amount of defaulted loans.

Banking practices: Rescheduling vs write-offs

In light of these numbers, some private management directors told TBS that write-offs are usually reduced in the first quarter of the year. In contrast, during the last quarter of the year, write-offs are aggressively increased to make the balance sheet look stronger.

A senior official in a private bank benchmarked this behaviour, pointing out that defaulted loans had previously been reduced from 35% in September to 30% in December.

However, many banks have not been writing off debts following the International Financial Reporting Standards model. Most banks have rescheduled instead of writing off.

"If you just reschedule, there is no benefit in dragging out the loan for 10 years; the defaulted loans will increase. Therefore, these bad loans should be written off instead of rescheduling," a senior official in a private bank said.

Another senior official of a private bank noted that the overdue loan period has been increased to 90 days, and the amount of defaulted loans in the banking sector has been increasing ever since. "On the other hand, during the March quarter, the number of defaulted loans in banks was heavily impacted by broader stagnation."

Macroeconomic stagnation and corporate distress

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank (MTB), believes that in the current economic situation, many companies are failing to do business properly and repay their debts to banks on time.

He observed that large companies are receiving various policy support from the central bank because of these persistent strains.

"Currently, there is a kind of stagnation in the economy. Due to this, many companies are not able to expand their businesses, and many are defaulting due to not being able to do business properly. Again, many institutions are not able to pay down payments on time," Mahbubur told TBS.

Critical factors behind the surge

Md Touhidul Alam Khan, MD and CEO of National Bank, outlined several critical factors explaining the mechanics behind the current NPL surge.

Regarding historical issues surfacing, he noted that previously hidden bad loans from major corporate groups are now being exposed under stricter oversight, revealing years of concealed financial irregularities that artificially suppressed NPL figures.

According to him, the expiration of moratorium periods and loan deferrals has forced banks to reclassify distressed accounts, leading to a sharp increase in reported NPLs as temporary relief measures ended.

Severe economic pressures, such as persistent inflation, rising borrowing costs, and global trade disruptions, have severely impacted business cash flows, making debt servicing difficult even for legitimate enterprises amid political and economic instability.

Governance failures, including weak risk management, inadequate credit evaluation, and poor collateral assessment, have created inherently vulnerable loan portfolios, while political interference in lending decisions has fostered a "culture of default" among influential borrowers.

At the same time, political interference in lending decisions has fostered a culture of default among influential borrowers.

Ultimately, the current crisis represents both the unveiling of historical mismanagement and genuine economic stress, creating a complex, dual challenge for the banking sector's ongoing recovery efforts.

Finance and Planning Minister Amir Khosru Mahmud Chowdhury today (Tuesday) said the core philosophy of the upcoming national budget is the democratization of the economy and bringing poor and marginalized communities into the mainstream of economic activities.

“The low-income people have historically been the most deprived in Bangladesh’s budgetary framework. Therefore, we have given priority to the poor, low-income groups and homemakers (housewives) in the upcoming budget,” he said, BSS reports.

The minister made the remarks while addressing a seminar titled “Budget 2026–27: Expectations and Reality” as the chief guest in the capital today, organised by the Economic Reporters Forum (ERF).

ERF President Daulat Akter Mala chaired the seminar. Executive Director of Centre for Policy Dialogue (CPD) Dr Fahmida Khatun, Chairman of East Coast Group Azam J Chowdhury and President of the Bangladesh Textile Mills Association (BTMA) Shawkat Aziz Russell attended the programme as special guests. ERF General Secretary Abul Kasem moderated the event.

The Finance Minister also said the next national budget seeks to address rising poverty, expand economic opportunities for marginalised groups and reduce bureaucratic obstacles to business, despite being prepared under exceptionally difficult circumstances.

“Preparing a national budget within one and a half months of assuming office was almost impossible, noting that the process normally takes at least six months,” he said.

He said the government inherited a fragile economy marked by declining indicators, weak investment, growing unemployment and rising poverty, but was nonetheless required to present a budget within the constitutional timeframe.

“The economy has reached a level where significant intervention is needed to restore stability and put it back on the path to prosperity,” he said, likening the situation to priming a tube well by pouring water into it before groundwater can be drawn.

Responding to criticism over the size of the budget amid economic challenges, Khosru said the government was investing heavily to revive economic activity and rebuild confidence.

He said the budget prioritises low-income and disadvantaged groups who have traditionally been overlooked in national fiscal planning.

Among the key initiatives, he highlighted the expansion of the Family Card programme, under which financial assistance will be transferred directly to women heading households through bank accounts, minimizing opportunities for corruption and political influence.

The minister claimed that a pilot project recorded only a 1-1.5 percent deviation rate and expressed confidence that the programme could achieve near-perfect targeting in future.

He also underscored the government’s focus on farmers through the introduction of Farmer Cards, aimed at strengthening food security and improving rural livelihoods.

On healthcare, Khosru said the government is moving towards universal primary healthcare, noting that Bangladeshis spend a disproportionately high share of their own income on medical treatment.

He said the programme would be implemented through partnerships involving the private sector and non-governmental organisations rather than relying solely on government agencies.

The finance minister also announced significant support for what he termed the “creative economy”, including artisans, weavers, folk craftsmen, performers, theatre artists and other cultural workers.

Under the initiative, targeted groups will receive skills training, access to finance, design assistance, branding support and opportunities to market products online, drawing inspiration from successful international models such as Thailand’s “One Village, One Product” programme.

Khosru said economic growth should not be measured solely through industrial production, arguing that creative industries and cultural activities also contribute significantly to gross domestic product (GDP).

“Our vision is the democratisation of the economy,” he said. “Economic participation and the benefits of growth must reach every citizen and every community.”

The minister reiterated the government’s commitment to strengthening the private sector, describing it as the primary driver of economic growth while positioning the state as a facilitator rather than a regulator.

He announced plans to simplify regulatory procedures through a one-stop service system under which multiple approvals would be processed within specified timeframes.

Applications not acted upon within the prescribed period would be deemed approved, he said.

Calling for a “deregulated economy”, Khosru said excessive controls had constrained businesses, citizens and institutions for years.

On budget implementation, he acknowledged concerns over low execution rates and said the government would introduce digital monitoring systems across the ministries.

According to the minister, all development projects will be tracked through dashboards at the ministry, finance ministry and Prime Minister’s Office levels, allowing delays and bottlenecks to be identified in real time.

He said future project selection would be guided by four criteria: value for money, return on investment, job creation and environmental sustainability.

The government has already reviewed around 1,300 ongoing projects inherited from previous administrations and plans to cancel those that fail to meet the new standards while repurposing others to improve economic returns, he added.

Turning to the capital market, Khosru said the government is restructuring the securities regulator and expects to appoint a new professional leadership team within weeks.

He said reforms would help attract quality listed companies, reduce pressure on the banking sector and enable businesses to raise long-term financing through the capital market.

The minister also said international financial institutions and major investment firms, including global fund managers, had expressed interest in Bangladesh as economic reforms gather pace.

Khosru expressed confidence that the budget’s inclusive approach, coupled with stronger governance and implementation mechanisms, would help restore stability and lay the foundation for sustainable and equitable economic growth.

He said money under the Family Card programme would be transferred directly to beneficiaries’ accounts, ensuring no political influence or intermediary involvement in the process.

Referring to the agriculture sector, the minister said a “Farmers Card” initiative has been introduced to strengthen food security and improve farmers’ living standards.

On the health sector, Amir Khasru said people in Bangladesh continue to incur high out-of-pocket healthcare expenses. In response, the government is prioritising the expansion of universal and primary healthcare services with the participation of government institutions, the private sector and NGOs.

A surge of US crude oil is arriving in Asia, but the record volumes are nowhere near enough to offset the loss of cargoes from the effective closure of the Strait of Hormuz.

Asia’s imports of US ​crude were 63.56 million barrels in May, the most for a single month although at 2.05 million barrels per day (bpd) they were slightly ‌behind the 2.07 million bpd from June 2023, according to data compiled by commodity analysts Kpler.

However, more US oil is on the way, with Kpler tracking arrivals of 2.32 million bpd in June and 3.07 million bpd in July.

This is more than double the average of 1.37 million bpd of US crude that Asia imported in the three months to the end of February.

The ​United States and Israel attacked Iran on February 28 and Tehran retaliated by effectively closing the Strait of Hormuz, through which about 20 percent of ​global crude oil and refined products moved prior to the start of the conflict.

While some Middle Eastern exporters such as Saudi Arabia and the United Arab Emirates have managed to re-route some oil exports to ports outside the strait, at least 10 million bpd of supply remains unavailable ​as the Iran conflict drags on.

About 1.2 million bpd of crude reached Asia in May through the Strait of Hormuz as some vessels secured Iranian approval to transit, ​but this is down from the average of 13.54 million bpd in the three months ended February.

The scale of the loss of cargoes through the strait overwhelms the additional volumes Asia has secured from the United States, as well as from other exporters in the Americas and Africa.

Asia’s seaborne crude arrivals in May were 19.47 million bpd, up from 18.7 million bpd in April, ​which was the lowest in more than 10 years, according to Kpler data.

However, even May’s higher arrivals were still 22 percent down from the average of 24.82 million ​bpd for the three months to the end of February.

It’s this loss of more than 5 million bpd in supplies that will ultimately lead to tough choices for Asia’s refiners.

So far ‌they have managed to keep plants operating by a combination of using up commercial and in some cases strategic stockpiles, while also reducing processing rates.

But there are now questions being asked as to how much longer the world can continue to deplete inventories before refiners are forced to significantly cut back throughput amid crude shortages.

There is an emerging consensus among most analysts and oil executives that the clock is ticking louder.

It’s likely that the process won’t be spread evenly across the world, with some regions likely ​to be able to continue producing and ​refining oil at usual rates, but others struggling to secure supply.

Ultimately, if the Strait of Hormuz doesn’t reopen within the coming weeks and doesn’t remain open on a sustainable basis, it’s likely that prices for refined fuels will have to increase in order to force a reduction ​in demand.

Asia, which took about 80 percent of the usual volumes through the Strait of Hormuz, is the most exposed and ​it’s likely that less well-developed, fuel-importing countries such as Bangladesh, the Philippines and Pakistan will experience the pain soonest.

There are also likely to be increasing questions asked in the United States about the rapid depletion of inventories amid record crude and product exports.

US politicians from both major parties tend to focus heavily on domestic issues and it isn’t hard to see them increasingly opposing oil ​and fuel exports in the mistaken belief that this will somehow lower retail prices at home.

Profits at most non-life insurance companies rose in the first quarter (January–March) of the current year compared to the same period last year mainly due to the introduction of zero commission in non-life insurance, cost cuts against the growth in marine insurance business.

Industry stakeholders attributed the increase to the introduction of zero commission in non-life insurance, companies' efforts to reduce management expenses, and growth in marine insurance business. They also believe the sector could see further improvement if geopolitical tensions in the Middle East ease.

Stakeholders noted that regulators have long received complaints about irregularities involving individual agents, including excessive commissions, mis-selling of policies, misleading customers, unnecessary policy sales, and artificially inflated premium income shown on paper.

The Insurance Development and Regulatory Authority (IDRA) also have information that some companies used multiple software systems and undisclosed bank accounts to conceal commission-related transactions.

However, the removal of commissions is expected to reduce management expenses and lift profitability. As commission-based sales decline, unnecessary policy sales may also fall. Premium pricing could become more realistic and customer-friendly, artificial inflation of premium income may ease, and healthier market competition is anticipated.

According to Dhaka Stock Exchange (DSE) data, 39 of 43 listed non-life insurers have published their quarterly results so far. Of these, 31 reported higher profits in the first quarter compared to a year earlier, while eight reported lower profits. The remaining four companies have yet to release their results.

Non-life insurance companies primarily cover risks such as fire, health, motor, marine, engineering, and liability.

Strong performers

Desh General Insurance led the pack with profit growth of around 120%, posting a net profit of Tk44 lakh in the quarter against Tk20 lakh a year earlier. Its share price rose 2.54% to Tk24.20 today (2 June).

Peoples Insurance reported a 105% increase in profit, reaching Tk5.96 crore from Tk2.91 crore a year ago. The company said lower agency commission expenses, reduced operating costs, and fewer claim settlements helped cut costs, lifting profit, operating cash flow, EPS, and NOCFPS.

Phoenix Insurance recorded a 67% rise in profit, earning Tk2.62 crore compared with Tk1.57 crore in the same period last year. The company cited higher premium and other income for the growth, while investment gains improved NAV per share and stronger cash collections boosted NOCFPS. Its share price rose 4.36% to Tk43.10 today.

Pragati Insurance posted a 55% increase in profit, with EPS rising to Tk1.63 from Tk1.05 a year earlier. The company attributed the growth to higher operating and other income, improved premium cash collections, and gains in investments, dividend and interest receivables, and cash equivalents, all of which strengthened NAV per share. Its share price also rose 3.07% to Tk70.40 today.

Under pressure

Agrani Insurance reported a 48% decline in profit, with EPS falling to 17 paisa from 33 paisa a year ago. The company cited lower premium and other income alongside higher claim settlements as the key drivers of the weaker performance.

United Insurance posted a 46–47% decline in profit, with net profit falling to Tk1.07 crore from Tk2 crore, and EPS dropping to Tk0.24 from Tk0.45.

Speaking to TBS, Managing Director of United Insurance Khawja Manzer Nadeem said, around 15% of total income went towards claim settlements during the quarter, largely tied to a fire incident at the airport that required payouts to clients including Unilever. He noted that the company's underlying business performance was otherwise positive, but the elevated claims overshadowed the gains.

Green Delta Insurance saw profit fall 29%, Mercantile Islami Insurance by 19%, and Rupali Insurance by 18% during the same quarter.

Overall, the majority of non-life insurers reported profit growth in the first quarter, though higher claims and softer investment income continued to weigh on a handful of companies.

Non-performing loans (NPLs) in the banking sector jumped by Tk 31,487 crore in the first three months of this year after a slight decline owing to the reclassification of rescheduled loans, lacklustre recovery, and overall economic slowdown.

At the end of March this year, total NPLs in the banking sector stood at Tk 588,704 crore, accounting for 32.26 percent of the total Tk 1,824,668 crore in disbursed loans, according to the latest data from Bangladesh Bank.

By the end of last year, the ratio of classified loans had dropped to 30 percent from 36 percent in September 2025, thanks to large-scale loan rescheduling under a special policy support programme by the BB.

Of the total NPLs, 94 percent falls into the bad and loss category, a level that economists say reflects not just economic stress but a breakdown of financial discipline among the country’s most powerful borrowers.

“Loan defaulting has emerged as a damaging culture in the country,” said Mustafa K Mujeri, executive director at the Institute for Inclusive Finance and Development (InM) and former BB chief economist.

“We are now seeing that even some of the country’s largest business conglomerates have become loan defaulters,” he said.

“These groups have received various forms of policy support from the government and Bangladesh Bank over the years, yet they still fail to repay their loans,” added Mujeri.

The economist blamed the rising volume of NPLs on a lack of strict action against defaulters, pointing out that these conglomerates cite a range of global and domestic challenges to obtain policy support, but they do not use those facilities to settle their debts.

“Under loan rescheduling schemes, many of these borrowers have been granted up to 10 years to repay their loans, yet a number of them eventually default again,” he said.

Instead of continuing to provide concessions to these defaulting borrowers, the authorities must take strict action against them immediately, Mujeri suggested, adding that otherwise the country’s banking sector will face serious consequences.

Meanwhile, bankers also point out that some top borrowers and businesses have suffered losses due to weak demand amid high inflation and the economic slowdown caused by the war in the Middle East.

Many good loans are showing signs of stress, and the overall banking sector is going through a downturn, which is why NPLs may have increased, said Mashrur Arefin, chairman of the Association of Bankers, Bangladesh (ABB).

Arefin, also the managing director and CEO of City Bank, said when discussing the reasons for the spike in NPLs, either the policy support cases were overhyped, many borrowers could not make the required down payments, or external auditors did not agree with many of the weak cases during annual profit audits.

He added that some weak banks with newly formed boards decided to take higher provisioning hits once and for all, which also contributed to the increase.

According to BB, compared with a year earlier, bad loans increased by Tk 168,370 crore. At the end of March 2025, NPLs stood at Tk 420,334 crore, with a ratio of 24.13 percent.

Due to the high volume of defaulted loans in the banking sector, the provision shortfall stood at Tk 205,665 crore as of March this year, data shows.

A provision shortfall in banking refers to the gap between the funds a financial institution is legally required to set aside to cover potential losses from bad loans and the amount it actually has in reserve. When borrowers fail to repay, banks must absorb these losses by drawing on current profits or core capital.

NPLs in the banking sector have continued to rise since the fall of the Awami League-led government on August 5, 2024, as many businessmen fled the country and many of their businesses shut down, pushing up bad loans.

Large borrowers such as S Alam, Beximco, AnonTex, Abdul Monem, Nassa Group, and Sikder Group defaulted on a large scale after the fall of the Awami League government in August 2024, causing an unprecedented rise in bad loans.

Central bank data states that NPLs at state-run banks stood at Tk 149,785 crore, accounting for 46 percent of their disbursed loans. Bad loans at private commercial banks stood at Tk 416,482 crore, representing 31.1 percent of their disbursed loans.

NPLs at foreign banks stood at Tk 3,263 crore, or 5 percent of their outstanding loans.

NPLs at specialised banks stood at Tk 19,175 crore, or 41 percent of their disbursed loans, the data shows.

The upcoming budget for fiscal year 2026-27 will seek to widen economic participation by bringing traditionally overlooked groups into the mainstream economy, Finance and Planning Minister Amir Khosru Mahmud Chowdhury said yesterday.

Speaking at a pre-budget discussion organised by the Economic Reporters’ Forum, he said the government aims to create greater opportunities for low-income households, farmers, artisans, cultural workers and women to contribute to and benefit from economic growth.

The minister described the budget as an effort to “democratise the economy”, ensuring that the gains of development reach a broader segment of society rather than being concentrated among a few groups.

Particular emphasis has been placed on supporting women, especially homemakers, whose contributions to family welfare and the wider economy have largely remained outside formal economic structures, he added.

“The budget will also include measures aimed at strengthening livelihoods for farmers, artisans and cultural workers, while expanding opportunities for lower-income families to participate more actively in economic activities,” he said.

To reduce out-of-pocket healthcare expenses for people across the country, a groundbreaking Universal Primary Healthcare project will be implemented nationwide through a collaboration between NGOs and the private sector, he added.

For instance, he said the government’s planned Family Card and Farmers Card programmes could be managed by private firms and NGOs to minimise political influence, improve transparency and reduce leakages.

The minister acknowledged that weak implementation has long undermined the effectiveness of public spending, despite successive governments announcing large budgets and development programmes.

“Budget implementation has been a problem. That is a correct observation,” he said, adding that the government is now trying to identify where projects get stuck and who is responsible for delays.

To address the issue, the government plans to introduce digital dashboards to monitor every development project, he said. “The dashboards will be accessible to individual ministries, the finance ministry and the Prime Minister’s Office, enabling authorities to track progress in real time and identify officials responsible for missed deadlines.”

Also speaking at the event, Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), identified revenue mobilisation as one of the biggest challenges for the upcoming budget, warning that Bangladesh has consistently failed to meet its tax collection targets over the past decade.

She spoke in favour of higher spending on education, healthcare and social protection, but noted that the real concern is whether the government can generate the revenue needed to finance its ambitions.

“Simply raising tax targets will not work without deep institutional reforms in revenue administration,” she said, adding that successive governments have relied on piecemeal measures instead of comprehensive reforms.

The policy expert also cautioned against putting greater pressure on existing taxpayers while failing to widen the tax net and tackle evasion.

She warned that excessive bank borrowing by the government could fuel inflation and crowd out private investment by pushing up lending rates.

Fahmida described inflation control as the budget’s foremost challenge, urging policymakers to focus spending on agriculture, energy, transport and logistics to ease supply constraints and boost production.

Sustainable growth, she said, will ultimately depend on better governance, stronger institutions, improved investment conditions and a stable law-and-order situation.

Azam J Chowdhury, chairman of East Coast Group, emphasised several longstanding concerns, including reforms to the Workers’ Profit Participation Fund (WPPF), removal of dividend double taxation, continuation of tax incentives for the ocean-going shipping industry, and simplification of land mutation procedures.

He called for a revision of the WPPF framework to ensure benefits reach workers as intended, while also addressing compliance challenges faced by listed companies.

Chowdhury emphasised the need for a more predictable tax regime and policy continuity to encourage private investment.

He also urged the government to go for administrative reforms, saying lengthy approval processes, particularly for land mutation and energy-sector investments, continue to deter businesses and delay new projects.

Shawkat Aziz Russel, president of the Bangladesh Textile Mills Association (BTMA), said supporting existing factories to upgrade capital machinery would yield faster and greater returns than building new facilities from scratch.

Modern equipment could raise productivity by 30-40 percent on average and, in some cases, by as much as 300 percent, while reducing gas and electricity consumption by around 30 percent, he said.

He stressed that such assistance should be implemented without delay, warning that lengthy decision-making processes have weakened the sector’s competitiveness.

The BTMA chief also criticised the interim government’s handling of the industry, saying timely policy support could have prevented the closure of hundreds of spinning mills and garment factories.

Russel further expressed concern over rising extortion and deteriorating law and order, noting that creating jobs and sustaining industrial growth remain essential to addressing such problems.

Chaired by Doulat Akhtar Mala, president of ERF, the event was moderated by Abul Kashem Khan, general secretary of ERF.

The government is likely to unveil its full-term tax plan on June 11, outlining income tax-free limits and tax rates for individual taxpayers up to the fiscal year 2030-31 (FY31), the final year of its tenure.

Under the plan, the tax-free income threshold is expected to gradually rise to Tk 4.5 lakh by FY31 in an effort to ease pressure on taxpayers amid persistently high inflation.

At present, individuals can earn up to Tk 3.5 lakh a year without paying income tax. This limit is set to increase to Tk 3.75 lakh in FY28 under the interim government’s earlier two-year tax framework.

Finance Minister Amir Khosru Mahmud Chowdhury is expected to go further in his first national budget on June 11 by introducing a broader three-year predictable tax system running through FY31.

Under the proposed roadmap, the tax-free income threshold will rise to Tk 4 lakh from FY29 and remain unchanged through FY30.

Prime Minister Tarique Rahman approved the proposal in principle on May 14 during a high-level meeting at the Secretariat, according to finance ministry officials who attended the meeting.

“The government wants to introduce a predictable tax plan so that taxpayers can set their financial plans accordingly,” a senior finance ministry official said, adding that the higher threshold would offer modest relief to lower-income earners.

However, economists and tax analysts have questioned whether the planned increases are sufficient given persistently high inflation.

“One positive aspect is that the government is providing predictability in tax policy. At the same time, it is making some adjustments for inflation, although we need to assess whether the increase fully matches inflation in percentage terms,” said Towfiqul Islam Khan of the Centre for Policy Dialogue.

Others argue that deeper structural issues remain.

“While policymakers understand the political economy needs to raise the tax-free threshold, they are also constrained by institutional pressure to boost revenue collection. Ultimately, that consideration appears to be driving their decisions,” Khan said.

“This is precisely why we have argued for separating tax policy from tax administration and revenue collection,” he added.

Inflation has remained around 9 percent since March 2023, significantly eroding real incomes. In April, inflation stood at 9.04 percent, according to the Bangladesh Bureau of Statistics.

Amid rising living costs, economists and business groups have repeatedly called for a higher tax-free income threshold, with many proposing an increase to Tk 5 lakh.

“Globally, setting tax rates in advance helps with planning, but international best practice usually limits this to a two- or three-year window, along with an automatic inflation adjustment mechanism,” said tax policy analyst Snehasish Barua.

He warned that extending fixed tax brackets until FY31 could create structural distortions in the tax system.

“Locking in fixed tax brackets until 2031 means that as prices rise, people will be pushed into higher tax brackets without any real increase in their purchasing power or wealth,” said Barua, managing director of SMAC Advisory Services.

He also expressed concerns about fairness, saying that partial adjustments could disproportionately affect middle-income earners. “Global tax standards also emphasise vertical equity. If only the initial tax-free threshold is raised while higher slabs remain unchanged, it creates an unfair ‘middle-class squeeze’,” he said.

Barua added that predictability should be balanced with flexibility, arguing that “long-term fiscal certainty must be paired with proportional, inflation-linked adjustments across all income slabs, rather than rigidly fixed rates stretching to 2030–31,” to align with global norms.

The global smartphone market is heading for its steepest annual contraction on record, with shipments projected to slump by 13.9% this year to 1.08 billion units, Counterpoint Research said on Monday, citing a worsening shortage of memory chips.

The forecast is a downgrade from the 12.4% decline projected in February, with the squeeze in global chip supply exacerbated by the Iran war.

Impact most acute at budget end of market

The impact is being felt most acutely in lower-end smartphones as chipmakers shift production capacity to AI-related chips, making entry-level devices less economical to produce.

Global smartphone wholesale prices rose 14% in the first quarter while shipments fell 3.1% year on year. That trend is expected to continue as inventory built before the supply shock becomes depleted, with some models priced below $150 likely to disappear from the market.

"Smartphone makers in the low and mid-tier are caught between cost increases they cannot absorb and consumers with limited spending power," said Wang Yang, a principal analyst at Counterpoint, an independent research company that publishes quarterly smartphone shipment data.

"The question is no longer how to grow shipments or market share, but whether to remain in the market at all."

The memory chip shortage is the most severe supply-side disruption the smartphone industry has faced, Wang said, adding that manufacturers are unable to offset the impact through pricing or product changes.

Premium end of the market more resilient

The premium segment has proven more resilient. Apple posted record revenue for the first three months of the year, helped by customers upgrading to its iPhone 17 series. Apple's 2026 shipments are expected to remain flat before rising 5% next year, Counterpoint projections show.

With more stable chip supply and stronger margins than many rivals, Apple is well placed to gain market share and could face less pressure to raise prices.

Samsung Electronics kept volumes steady in the first quarter and is expected by Counterpoint to register only a 4% decline in shipments over the full year, outperforming the wider market thanks to stable supply and a consistent product line-up.

Transsion, which is heavily exposed to the market for smartphones priced below $150, is forecast to suffer a 32% drop in shipments this year. Rivals Xiaomi and Honor, meanwhile, are projected to post full-year declines of 28% and 20% respectively, Counterpoint said.

Sri Lanka has expressed that the time is opportune to elevate its relations with Bangladesh to a higher level, underscoring the importance of arranging a state-level visit between the two friendly nations in the near future.

The observation was made by Sri Lanka's acting Foreign Minister Arun Hemachandra during a farewell call by Bangladesh High Commissioner to Sri Lanka Andalib Elias in Colombo yesterday, according to a press release issued on the occasion.

During the meeting, Hemachandra highly appreciated the Bangladeshi envoy's contributions to strengthening bilateral relations throughout his tenure in Colombo.

Expressing satisfaction over the progress achieved in bilateral cooperation, the acting Foreign Minister said Dhaka and Colombo should seize the opportunity to further advance their partnership through enhanced political engagement and high-level exchanges.

He particularly stressed the need for arranging a state-level visit between the two countries at an early date to open new avenues of cooperation.

High Commissioner Elias reaffirmed Bangladesh's commitment to deepening bilateral cooperation and expanding engagement with Sri Lanka in areas of mutual interest.

The envoy also expressed gratitude to the acting Foreign Minister for his personal support, guidance and goodwill throughout his diplomatic assignment in Sri Lanka.

The meeting reflected the longstanding friendship between Bangladesh and Sri Lanka and their shared determination to further strengthen and elevate bilateral relations in the years ahead.

Information and Broadcasting Minister Zahir Uddin Swapon says that due to Bangladesh’s import dependence on fuel oil, prices been increased to keep pace with the ongoing international crisis.

“Populist decision-making is not the only job of the government, the job of the government is to maintain good governance in the long term,” he said in response to a question while speaking to the media at the Secretariat on the first working day after the Eid holidays on Monday.In response to reporters’ questions regarding the increase in fuel oil prices, the information minister said, “You probably know that since the day the energy crisis began, all the countries that are dependent on import-based energy have been increasing prices in line with the international crisis. Everyone knows that even though everyone else has increased prices, our government has maintained fuel prices at their old level for a long time, despite being an import-dependent country.

“We have to import fuel. Our power minister and state minister have regularly informed the nation about this and provided the statistics. But if it is true that we have to continue importing, then we will have to continue relying on import capacity.”The Ministry of Finance and the Ministry of Power, Energy, and Mineral Resources have already formed an advisory committee under the leadership of Wahiduddin Mahmud to deal with the war situation, the minister said.Financial Planning Services.He said, “The government is acting on the advice of the advisory committee and the advice of Wahiduddin Mahmud, a prominent economist in the country. According to his counsel, prices have not been increased for a long time.“Again, the crisis is not over yet, and we will have to continue importing. The government has to keep running while keeping all these things in mind.”

Stalled mass rapid transit (MRT) projects receive a substantial sum of Tk 126.49 billion in ADP allocations for the upcoming fiscal year as the government vows to construct three Dhaka metro-rail lines after prolonged dilemmas, officials say.The long-stalled MRT-1 and MRT-5 (Northern) lines have got significant allocations in the FY27 Annual Development Programme (ADP).The ongoing MRT-6 project has also been given a hefty allocation, Planning Commission officials say.

The National Economic Council (NEC) has approved a Tk 3.0-trillion ADP for FY27, where nearly 1,150 development projects, including the MRTs, have got large allocations.Economy Forecast Reports.In the new ADP, the MRT-1 line from Dhaka airport to Kamalapur has grabbed Tk 73.50 billion, 817-percent higher than that in the FY26 Revised ADP (RADP).

MRT-5 (Northern route) from Hemayetpur to Vatara secures Tk 34 billion, which is 431-percent higher.

Besides, MRT-6 from Uttara to Kamalapur, which is near completion, gets Tk 18.99 billion, in an 86-percent increase.

The Executive Committee of the National Economic Council (ECNEC) approved both the MRT-1 and MRT-5 (northern) projects in October 2019 with a combined estimated cost of Tk 937.9998 billion.

The estimated project cost for MRT-1 was Tk 525.61 billion and that for MRT-5 was Tk 412.39 billion.

Japan International Cooperation Agency (JICA) is financing all three MRTs.A senior Roads and Highways Division official told The Financial Express they had sought higher funds for the three projects."We are trying to restart the construction of MRT-1 and MRT-5 stalled for long. We recently held a meeting with all the parties, including the fund provider, for expediting work," he added.

Another official of the division says since the bidding prices of some of the packages of MRT-1 and MRT-5 are much higher than official estimations, they are working to renegotiate with the bidders to reduce prices.Finance Daily Reports

"We are hopeful of settling the issues within a short period of time and restarting construction," he adds.

A senior Planning Commission official says they have allocated higher funds for the stalled MRT projects in response to the demand of the Roads and Highways Division.

"Since they've vowed to restart construction, we have allocated higher funds," he adds.

Chinese companies in 15 key industrial sectors received vastly more state support than their international competitors between 2005 and 2024, according to an OECD report released on Monday.

The 15 sectors received $108 billion in 2024 alone, according to data compiled by the Organisation for Economic Cooperation and Development in its Manufacturing Groups and Industrial Corporations (MAGIC) database.

Between 2005 and 2024, it added, “Chinese firms received on average three to eight times more government support than firms based in the OECD, a conservative estimate.”

“These subsidies were also considerably higher than the support received by firms based in non-OECD economies such as Brazil, India and Indonesia.”

The Paris-based organisation of 38 member countries said its “conservative” estimate was based on disclosures by the biggest companies in the 15 sectors, which underpin entire segments of the global economy.

It considers direct subsidies, tax breaks and favourable loans from banks and public financial institutions -- at times below their base lending rates -- to be public support.

“For Chinese firms, almost 60 percent of their global market share gains can be explained by the subsidies they received,” the OECD said.

Chinese firms have carved out huge market shares over 20 years in sectors such as solar panels, shipbuilding and steel, not because they are better than their US or European competitors but because of their unparallelled state support, it added.

- Effect of subsidies -

With subsidies, they have more financial leeway to invest in new production sites, more time to reach profitability and greater support against economic headwinds, according to the report.

This has led to overcapacity in some sectors, pushing down global prices to the detriment of other international players.

“Just like doping in sports, the risk is that subsidies help less productive players win unfairly at the expense of better, more innovative and more efficient ones,” the OECD’s Secretary-General Mathias Cormann told a press conference.

“Subsidies increased market share but that did not lead to significant gains in productivity or profitability,” Cormann added.

“Firms won market share not by being more efficient or more innovative but by being more heavily subsidised.”

The OECD looked at aerospace and defence; aluminium; car manufacturing; cement; chemicals; fertilisers; glass and ceramics; heavy machinery; semiconductors; shipbuilding; photovoltaic panels; steel; telecommunications equipment; rolling stock; and wind turbines.

Worldwide state support in these sectors reached its highest level since the 2008 financial crisis in 2023-24, amounting on average to 1.3 percent of companies’ revenues in 2024.

The OECD noted that the peak observed in 2009 coincided with a severe global recession, which was not the case in 2023-24.

That “indicates the recent increase in industrial subsidies to be more structural”, it added.

Gold prices fell on Monday ‌as renewed US-Iran tensions pushed the dollar and oil prices higher, fuelling fears of inflation and reinforcing the higher-for-longer interest rate outlook.

Spot gold was down 0.8 percent at $4,498.89 per ounce at 0909 GMT after ​hitting a two-week high on Friday. The yellow metal dropped 0.9 percent in May, ​its fourth consecutive monthly fall.

US gold futures for August delivery fell 1.4 percent to $4,528.90.

The dollar edged higher, making greenback-priced bullion more expensive for holders of other currencies.

The ​US said it struck Iranian military sites over the weekend and Iran’s Revolutionary Guards on Monday ​said they had targeted a US base in response, the latest exchange of attacks amid negotiations to end the three-month-old war.

“The optimism surrounding negotiations between the US and Iran aimed at ending the standoff ​in the Strait of Hormuz faded over the weekend,” ActivTrades analyst Ricardo Evangelista said. “As a ​result, energy prices rebounded, reviving inflation concerns and reinforcing hawkish Federal Reserve expectations.”

Brent crude oil prices gained ‌more than 3 percent after the latest strikes. Higher oil prices can accelerate inflation and keep interest rates higher for longer. While gold is traditionally seen as a hedge against inflation, it loses its appeal in a high-interest-rate environment as a non-yielding asset.

Traders are now pricing ​in a Fed rate ​hike this year, with a 40 percent chance of a quarter-point increase in December, according to CME Group’s FedWatch tool.

A host of Fed board members are set ​to speak this week, while major data releases are scheduled to ​include the ⁠ISM survey of manufacturing and the May payrolls report on Friday.

“Traders will be closely watching this week’s key data releases as these have the potential to reshape expectations regarding the future ⁠path ​of Fed monetary policy, influencing demand for the US ​dollar and, consequently, the performance of gold prices,” Evangelista said.

Spot silver rose 0.7 percent to $75.79 per ounce, platinum gained 0.4 percent ​to $1,925.26 and palladium fell 0.8 percent to $1,343.55.

Remittance inflows in Bangladesh remained above $3 billion for the sixth consecutive month, hitting $3.42 billion in May, as expatriates sent more money home to support family spending for Eid.

Bangladesh Bank data showed that inflows rose by 15.34 per cent in May compared with those of $2.96 billion in May 2025.

The figure was $3.12 billion in April, $3.75 billion in March, $3.02 billion in February, $3.11 billion in January and $3.22 billion in December

In the first 11 months of the 2025-26 financial year, remittance receipts increased by about 19 per cent to $32.75 billion, compared with those of $27.5 billion in the corresponding period of the previous fiscal year, reflecting sustained growth in inflows.

Bankers said that seasonal factors played a key role in the surge, as migrant workers typically send higher amounts to support family spending for Eid.

This year, Eid-ul-Azha, one of the biggest religious festivals of the Muslims, was observed on May 28.

They also pointed to the ongoing Middle East conflict as an additional factor.

Many expatriates reportedly sent larger sums or transferred savings back home due to concerns over potential disruptions in host countries and financial uncertainty linked to the war.

The interbank dollar rate rose to about Tk 122.75 in May from Tk 122.27 in late February, indicating growing pressure on the local currency.

Bangladesh recorded more than $30 billion in remittance inflows for the first time in the 2024-25 financial year, with total receipts reaching $30.32 billion, up from $23.91 billion a year earlier.

Monthly inflows have remained above $2 billion since August 2024.

Officials said that policy support had contributed to the steady rise.

Since January 2022, the government has provided a 2.5 per cent cash incentive on remittances sent through formal banking channels.

Improved exchange rates and stricter monitoring of cross-border transactions have also encouraged expatriates to avoid informal transfer systems.

Higher remittance earnings have helped ease pressure on the balance of payments and support foreign exchange reserves.

According to the Bangladesh Bank, reserves stood at $30.1 billion under IMF methodology on June 1, while gross reserves were around $34.76 billion.

Stocks edged higher in the first trading session after the week-long Eid vacation today (1 June), driven by strong investor participation on the buying side, which lifted both indices and turnover.

According to market data, the DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), rose 37 points to close at 5,372. Turnover also increased by 17% to Tk 912.38 crore.

Market momentum was largely supported by banking stocks, with strong buying interest in fundamentally sound issues. The banking sector alone accounted for seven of the top 10 contributors to the index gain.

BRAC Bank emerged as the single largest contributor, adding 5 points to the DSEX, according to data from the LankaBangla Financial Portal.

A majority of listed stocks recorded price gains. Of the traded securities, 179 advanced, 152 declined, while 55 remained unchanged at the DSE.

In its daily market commentary, EBL Securities said the benchmark index opened the post-Eid trading session on a positive note, supported by buoyant investor sentiment and continued interest in selective high-momentum stocks.

"The market was upbeat from the opening bell, building on post-Eid optimism that continued to fuel buying interest and drive broad-based price appreciation across most scrips for a sixth consecutive session," it said.

On the sectoral front, engineering stocks accounted for the highest share of turnover at 17.4%, followed by banking (16.0%) and pharmaceuticals (12.4%).

Most sectors posted positive returns, with IT, life insurance and banking leading the gains. In contrast, jute, tannery and general insurance sectors recorded the highest corrections.

Among individual movers, Sonargaon Textiles topped the gainers' list, rising 10% to Tk49.5 per share, followed by Golden Son, which gained 9.93% to Tk16.6, and Nahee Aluminum, up 9.32% to Tk37.5.

On the other hand, Premier Leasing led the losers, falling 7.40% to Tk2.5 per share, followed by Union Capital, down 6.52% to Tk4.3, and Prime Finance, which declined 6.06% to Tk3.1.

The Chittagong Stock Exchange (CSE) also ended the session in positive territory. The CSCX and CASPI indices advanced by 45.2 points and 61.0 points, respectively.

The Bangladesh Securities and Exchange Commission (BSEC) has again rejected Daffodil Computers Limited's plan to issue shares against loans, according to a stock exchange disclosure.

After facing the rejection of its initial plan, the IT sector firm in November last year reapplied to the commission for converting Tk49 crore loans, availed from one of its associate firms of the Daffodil Group, into equity.

With the shareholders' approval through an extra-ordinary general meeting (EGM), after revising its plan, it again applied to the commission, but the commission rejected converting loans into equity citing that the regulator is not in a position to accord its consent.

Daffodil Computers had availed Tk49.03 crore loans from Creative International, a concern of Daffodil Group. To offset the loan, it had planned to issue shares in favour of the lender company.

In its revised plan, the listed company sought stock market regulator nod to issue shares at Tk15 each with a plan of issuing total 3.27 crore shares.

In December 2024, its board had approved and subsequently submitted the plan to the commission to issue shares at Tk10 each against the loans.

Then, the commission rejected its share issuance plan as it had not secured its shareholders' nod. Later in December 2025, the company secured shareholders' nod on share issuance decision.

At that time, too, the securities regulator turned down the plan, citing that the move would unfairly favour the group's controlling interests while diluting the holdings and earnings of ordinary investors.

Now, Daffodil Computers faced a second time rejection for a share issuance plan for repayment of loans.

Daffodil Computers, one of the early technology companies listed on the stock exchange, remains a key entity within the Daffodil Group, which has diverse interests in IT, education, and media.

According to its quarterly financial statements, in the first nine months of the current fiscal year, it had reported declining revenue and profitability slightly.

In the July to March period, its revenue declined to Tk28.79 crore and net profit after tax to Tk1.16 crore, which was Tk30.28 crore and Tk1.56 crore respectively.

Daffodil Computers' shares closed 4.24% higher at Tk142.50 each on the Dhaka Stock Exchange (DSE).

Earlier, the company decided not to pay any dividend to its shareholders for the fiscal year of 2024-25. During the fiscal year, its earnings per share dropped by 24% to Tk0.16, compared to the previous year.

BRAC Bank PLC has signed two refinancing agreements with Bangladesh Bank.

The aim is to improve access to affordable finance for cottage, micro, small, and medium enterprises (CMSMEs). This step shows BRAC Bank's commitment to entrepreneurship and financial inclusion.

The agreements allow BRAC Bank to provide financing to entrepreneurs in different clusters across the country. Through Bangladesh Bank's Financial Sector Fund for MSMEs, the bank can offer low-cost credit support.

Through the Tk3,000 crore Cluster Finance Refinance Scheme, BRAC Bank will provide term loans and working capital. These loans support entrepreneurs in various industrial clusters. Eligible businesses can access financing at concessional rates starting from 7 per cent. This support helps expand businesses, boost productivity, and create jobs.

The second agreement lets BRAC Bank use the Tk1,500 crore Financial Sector Fund for MSMEs. MSMEs in the manufacturing and service sectors can get financing at a 7 per cent interest rate. The facility offers loans of up to Tk1 crore for microenterprises and up to Tk5 crore for small and medium enterprises.

Tareq Refat Ullah Khan and Nawshad Mustafa exchanged agreement documents at a ceremony at the Bangladesh Bank on 18 May 2026. Deputy Governor Nurun Nahar was present.

Husne Ara Shikha, Executive Director of Bangladesh Bank, and Mahbubur Rahman, Head of Cottage, Micro and Small Business and Liability and Cash Management, SME Banking, BRAC Bank, also attended.

BRAC Bank, as the country's leading SME-focused bank, continues to pioneer the expansion of access to finance for grassroots entrepreneurs, leveraging Bangladesh Bank's refinancing schemes. The bank states that these initiatives will foster business growth, job creation, and sustainable economic development across Bangladesh.

The government is going to expand social safety net programmes in the upcoming budget to check growing poverty amid an economic slowdown made complicated by regional wars.

This is one of the priorities of the newly elected government led by the Bangladesh Nationalist Party to set the platform for a welfare economy, said finance division officials.

In its first budget of the current five-year tenure on the back of war in the oil-rich Middle East, about 41 lakh family cards will be distributed at a cost around Tk 12,373 crore in the next financial year of 2026–27.

Farmer Cards would also be provided to 42 lakh beneficiaries with a financial allocation of Tk 1,062 crore in FY27.

Finance and planning minister Amir Khosru Mahmud Chowdhury has already said they are committed to the Family Card project referring it a cornerstone of the government›s commitment to social welfare and inclusive development.

Economists say targeting needy and poor through the card programme was a good idea, but it has implementation challenges like politics on selection and wastes of money.

Family Card holders will receive cash assistance of Tk 2,500 per month, while Farmer Card holders will receive Tk 2,500 once a year.

Both cards have already been launched on an experimental basis in line with the BNP’s electoral pledges.

The government will also increase the number of old-age allowance beneficiaries by one lakh in FY27 with a recipient currently getting Tk 700 a month.

The allowance is one of the government’s 95 social safety net programmes for which around Tk 1.17 lakh crore was allocated in FY26 national budget.

In FY27 national budget, the amount will go up to Tk 1.30 lakh crore, said the finance ministry officials.

Through the new budget, the government will also implement a decision that beneficiaries enjoying the privileges of Family Cards would not qualify for any other benefits under the social safety net programmes.

Even the government employees, pensioners, savings certificate holders, Trading Corporation of Bangladesh cards or vehicles registered with the Bangladesh Road Transport Authority will not be eligible, said the finance ministry officials.

The finance and planning minister said the government was actively identifying and rectifying initial implementation errors to ensure a long-term success of the family cards.

Bangladesh Institute of Development Studies director general AK Enamul Haque has suggested that the government should made randomised controlled trial on piloting cards distribution.

Randomised controlled trial is a type of statistical experiment designed to evaluate the efficacy or safety of an intervention by minimising bias, he said.

Terming the overall card programme as a good step, the BIDS DG says more important was overcoming the implementation challenges like political selection, duplication and wastes of money.

Institute for Inclusive Finance and Development Executive Director Mustafa K Mujeri says the government needed to expand social safety net progrmme to check growing poverty.

A recent World Bank report titled ‘Bangladesh Development Update: Special Focus – A Business Environment that Delivers Jobs’ projected around 1.4 million more people falling into poverty in the country in 2025, the rate reaching 21.4 per cent, which was 20.5 per cent in 2024.

Economists attribute falling growth in gross domestic products below 4 per cent in 2024-25 from 7 per cent 2021-22 on the back of double-digit inflation for the growing poverty.

Post service benefits of the public employees shown in the social safety net programme to show a bigger allocation should be excluded for the benefit of poor and needy people, economists say.

Almost a quarter of the overall allocation under the social safety net prograame is included with pension fund, added the economists.

The recent decline in the non-performing loan (NPL) ratio, from 35.73 percent in September 2025 to 30.60 percent in December, may appear encouraging. However, the improvement largely reflects relaxed loan rescheduling policies rather than any meaningful improvement in asset quality. Allowing defaulted loans to be regularised with only a 2 percent down payment, now further staggered, merely delays recognition of the problem.

Even after this decline, Bangladesh still has one of the world’s highest NPL ratios. The comparison with neighbouring and crisis-hit economies is striking. Pakistan’s stands at 7.4 percent, India’s at 2.3 percent, while Sri Lanka, despite a severe sovereign debt crisis, maintains 12.6 percent. Ukraine, amid prolonged war, recorded 26.1 percent, and Lebanon, after years of economic collapse, 23.8 percent. Bangladesh’s banking distress therefore appears deeply structural.

The capital adequacy situation is even more concerning. Under Basel III guidelines, banks must maintain a Capital to Risk-Weighted Assets Ratio (CRAR) of 12.5 percent. Yet the industry’s position has deteriorated sharply. CRAR fell from 11.6 percent in 2020 to 10.64 percent in June 2023, then to 6.86 percent in September 2024 and 3.08 percent by December 2024. By December 2025, it had entered negative territory at minus 2.9 percent, the first such occurrence in Bangladesh’s history.

This exposed a reality long hidden by weak governance and underreported risk-weighted assets. For years, several banks projected an illusion of stability by understating the quality of their loan portfolios. Once disclosures became more transparent after the 2024 political changeover, the scale of impairment surfaced rapidly.

By September 2025, 23 banks had accumulated a capital shortfall of Tk 2.82 lakh crore. Five banks accounted for nearly 59 percent of the deficit. Some now carry NPL ratios exceeding 90 percent, raising serious questions about their viability under existing ownership and governance structures.

A banking system cannot survive indefinitely on regulatory forbearance. Capital is the final shield against financial instability. Without adequate buffers, banks lose credibility at home and abroad. Cross-border trade finance becomes more difficult as foreign correspondent banks place significant emphasis on capital strength before advising, confirming or funding letters of credit. Weak capitalisation also affects risk ratings, constrains deposit mobilisation and limits lending.

In this context, aggressive recapitalisation has become unavoidable.

One possible route is the issuance of rights shares. However, this may prove ineffective for distressed banks where sponsors are financially weakened or face allegations of insider lending, governance failures or siphoning money abroad. Rights issues are therefore likely to remain undersubscribed, leaving banks trapped in chronic undercapitalisation.

Bangladesh needs a more pragmatic ownership restructuring framework. The regulation restricting any individual, family or group from holding more than 10 percent equity in a financial institution may require temporary relaxation for selected distressed banks. A time-bound policy window of three to five years could allow financially capable sponsors to inject fresh capital beyond the ownership ceiling. During this period, banks could stabilise operations, improve governance, rebuild compliance standards and restore profitability. Once financial health is restored, excess ownership could gradually be diluted through partnerships with strategic investors. The central bank’s recent stipulation allowing only banks with more than Tk 20 billion in equity to declare cash dividends is a step in the right direction.

Several Asian economies have used similar restructuring approaches during periods of banking stress. Their experience shows that temporary flexibility, backed by strong oversight and governance reforms, can prevent systemic collapse and restore market discipline. Bangladesh’s banking sector requires more than liquidity support or loan rescheduling facilities. It needs credible capital, competent ownership and institutional accountability. Without them, financial stability will remain fragile, and the sector’s ability to support economic growth will continue to weaken.