Finance Minister Amir Khosru Mahmud Chowdhury has said the conditions being added by the International Monetary Fund (IMF) under the loan agreement are not “suitable” for the economy of Bangladesh.

He made the comments at a discussion titled “Roadmap to Building Bangladesh’s Economic Future in the Face of Global Uncertainty” organised by the Daily Bonik Barta in Dhaka on Monday.Economic Trend Reports

The finance minister said the government could not accept all IMF conditions out of “responsibility” to the people.

Khosru said, “Most of the development partners agree with the BNP’s election manifesto. They are my development partners. If they do not agree with me, I will not be able to move forward.

“There are disagreements in many places with the IMF, because the conditions that they are giving are not suitable for my economy.”

Explaining the government’s continued stance against the IMF’s conditions, he said: “We are an elected government with a responsibility to the people. We cannot do everything according to their words.

“That is why we have differences with some multilateral organisations, and these differences will continue.

“I will correct my course as much as it is consistent with my manifesto. It is not possible to do anything beyond this.”

Amid concerns about the release of the remaining amount of the loan agreement with the IMF, the minister claimed on Apr 18 that the IMF has a “positive” attitude to continue the loan programme.

Earlier, after a meeting with IMF Deputy Managing Director Nigel Clark in Washington DC, US, he told journalists: “The discussions [on the release of funds] are still ongoing.”Geographic Reference

About three weeks later, he indicated that Bangladesh had failed to meet the IMF’s conditions, even as the country sought an additional $2 billion beyond the existing loan package.

The additional funds were requested to tackle the fuel crisis amid the war in the West Asia.

However, the IMF reportedly imposed stricter conditions than those under the current agreement.

Bangladesh signed a $4.7 billion loan deal with the IMF in early 2023 after several rounds of negotiations during the Awami League government to address the financial crisis.

In June 2025, the interim government led by Muhammad Yunus increased the package by $800 million, raising the total to $5.5 billion.

So far, Bangladesh has received $3.64 billion in five instalments, leaving $1.86 billion outstanding. The sixth instalment and the remaining funds were due in December last year.

At the time, the IMF said the remaining amount would be released following discussions with an elected government.

Before disbursing the funds, the lender also sought progress on reform conditions, including improvements in revenue collection, where implementation has lagged.

The dollar was steady on Monday after US President Donald ​Trump rejected Iran’s response to a US peace proposal, sending oil prices higher and prompting renewed concerns that ‌the conflict in the Middle East will drag on.

The US dollar index , which measures the greenback’s strength against a basket of six currencies, was little changed at 97.995.

Oil prices, meanwhile, jumped, with Brent crude up 3.6 percent at $104.94 a barrel, after President Donald Trump on Sunday rejected Iran’s response to a US proposal for peace ​talks, raising worries that the 10-week-old conflict may drag on.

Yet, markets still seem to believe that the conflict will be resolved, ​said Kenneth Broux, head of corporate research for FX and rates at Societe Generale.

“I think the reason for that may be the involvement of China,” he said. “The summit with China and the US later this week is, ​for me, the main event really,” Broux said, pointing to the influence the two countries have in the Middle East.

Trump and Chinese President Xi Jinping are set to discuss Iran, Taiwan, artificial intelligence, nuclear weapons and critical minerals when they meet, according to US officials.

Inflation and growth worries linked to higher oil prices, as well as any potential reaction from central banks, also continue to play on the ​market’s mind, Broux said.

US inflation data for April is due this week after the US jobs report released Friday showed that non-farm ​payrolls increased 115,000 in April, almost twice as fast as expected. Those figures reinforced expectations the Federal Reserve would keep interest rates unchanged for ‌some ⁠time.

The Fed held rates steady last month as expected, but the decision exposed its deepest split in decades, with three officials dissenting against signalling future rate cuts.

The Bangladesh Association of Banks (BAB) has urged the central bank to relax eligibility criteria for refinance schemes by removing current restrictions on banks with high non-performing loans (NPLs) and reducing general provisioning for rescheduled loans.

In a letter to the governor yesterday, the association proposed banks with NPL ratio below 20% should remain eligible for refinance and prefinance schemes for at least the next five years. It also requested to reduce the general provisioning requirement for rescheduled loans from 5% to 1%.

Currently, banks with high NPL ratios are often excluded from these facilities, which BAB argues unintentionally limits credit support to productive sectors such as SMEs, agriculture, and exports.

The BAB also sought policy support for income recognition during grace periods and several other reforms to help the sector navigate its current "challenging phase".

The letter highlighted that the banking sector is grappling with elevated NPLs, provisioning shortfalls, and liquidity pressures, necessitating coordinated and pragmatic policy interventions to restore investor confidence and maintain credit flow to the real economy.

Reforming rescheduled loan classification, provisioning

BAB has also expressed concerns over the financial impact of current regulatory treatment of policy-supported rescheduled loans. Under existing rules, these loans are generally treated as Special Mention Accounts (SMA), requiring a 5% general provision and carrying a 150% risk weight.

The association argued that these requirements place undue pressure on Capital Adequacy Ratios (CAR) and limit fresh lending capacity. Consequently, BAB requested the central bank to treat compliant policy-supported rescheduled loans as Unclassified (UC), reduce the general provision requirement from 5% to 1%, and assign a more moderate risk weight instead of the current 150%.

Furthermore, BAB pointed to a mismatch where banks incur funding costs on deposits during a borrower's one-to-two-year grace period but cannot recognise interest income.

The association proposed allowing accrual-based income recognition during the grace period or immediate recognition upon the expiry of the grace period to protect bank profitability.

Addressing capital pressures and tax hurdles

The letter also detailed how certain tax policies and market classifications are hurting the sector's stability. BAB requested an exemption from the 10% additional tax on stock dividends for banks maintaining capital adequacy under Basel III.

The association said penalising the retention of earnings through stock dividends discourages banks from strengthening their Tier-1 capital.

Additionally, BAB proposed several fiscal measures for the upcoming national budget, including reducing the corporate tax rate for listed banks to 30%, allowing loan-loss provisions as tax-deductible expenses for at least five years, and preventing the automatic migration of banks to the "Z Category" on the stock exchange if they are under approved restructuring or transformation programmes.

Strengthening recovery through AMC and legal reforms

To address "legacy NPL challenges", BAB proposed establishing a professionally managed national Asset Management Company (AMC). The AMC would acquire large classified portfolios, conduct forensic investigations, and facilitate faster settlements.

On the legal front, the association called for amendments to the Artha Rin Adalat Ain to include ultimate beneficiaries and the introduction of fast-track financial courts. It said judicial bottlenecks, such as the misuse of stay orders, continue to delay the recovery of classified loans.

Bank owners fear return of former directors

Also yesterday, leaders of the BAB met Governor Mostakur Rahman.

Speaking to reporters after the meeting, BAB Chairman and Dhaka Bank Chairman Abdul Hai Sarker said the association was concerned about a provision in the amended Bank Resolution Act that could allow former bank owners to return to banks.

He said the amended law had created scope for individuals who had siphoned money from banks to return. "People know who took money from banks. If they are allowed to return, public confidence in the banking sector will weaken further, creating the risk of another crisis."

He added that the government should consider the issue more carefully. He further said important policy decisions such as amendments to banking laws should be discussed with stakeholders beforehand.

The BAB chairman said the governor had assured them that former owners would not be able to return without fully complying with the conditions outlined in Section 18(A) of the amended law.

The meeting was also attended by former FBCCI president and Shahjalal Islami Bank Director AK Azad, United Commercial Bank Chairman Sharif Zahir, Pubali Bank Chairman Monzurur Rahman and Bank Asia Chairman Romo Rouf Chowdhury.

A high-powered committee led by the Bangladesh Bank has recommended extending the maturity of Beximco Ltd's Tk3,000 crore green sukuk by six years to 2032, instead of its scheduled maturity in December 2026, to avoid a potential default and protect institutional investors heavily exposed to the instrument.

The recommendation was finalised at a meeting held at the central bank yesterday under the leadership of Deputy Governor Md Kabir Ahmed, where the committee reviewed the feasibility of restructuring the terms and conditions of the "Beximco Green Sukuk Al Istisna".
The proposed extension remains subject to approval by the Bangladesh Securities and Exchange Commission, which has regulatory authority over bond approvals, tenure extensions and changes to profit rates.

Officials familiar with the discussions said the existing 9% profit rate on the sukuk could increase by around 1 to 1.5 percentage points following the extension, linked to the yield on five-year treasury bonds. The current yield on five-year government treasury bonds stands at 10.78%.
Cenbank moves to prevent default

The decision follows months of discussions within two separate committees formed to examine the sukuk's restructuring.

Earlier, a Bangladesh Bank high-level committee and a separate 21-member working committee led by the Investment Corporation of Bangladesh, the trustee of the sukuk, had discussed extending the instrument's tenure.
However, officials said the central bank committee has now reached a final decision in favour of extending the maturity period.
Under the proposed arrangement, the ICB will formally inform the securities regulator of the committee's decision and initiate the required process for obtaining approval for the extension.

Officials at the meeting said the trustee would not inject additional funds to complete the partially developed Korotoa Solar Park, which had been financed through the sukuk's sinking fund.

The project suffered severe damage during political unrest surrounding the change in government in August 2024, when machinery and transformers at the solar park were burned, preventing the project from being connected to the national transmission grid.

According to officials, approximately Tk150 crore will now be required to make the project operational.

However, Beximco or a third-party investor may still revive the project with fresh investment. Any new investment would be recoverable only after sukuk investors are fully repaid.

Institutional investors heavily exposed

An official present at the meeting said Beximco Ltd's operations had effectively come to a halt following the political transition last year, making it impossible for the company to repay investors within the current maturity period ending in December 2026.

He said around 97% of the sukuk investors are institutional investors, primarily banks and bank subsidiaries. Failure to repay investors on time would place significant pressure on the banking sector, as banks could face provisioning requirements if the instrument were to fall into default.

"Considering the overall situation, the committee decided to extend the maturity period," the official said.

According to ICB's calculations, the Teesta Solar Plant financed through sukuk proceeds is currently supplying 200MW of electricity to the national grid and generating around Tk50 crore in monthly revenue.

Of that amount, approximately Tk7 crore is paid to Beximco as operational expenses, while the remaining revenue is used for periodic profit payments and contributions to the sinking fund.

Based on these cash flows, officials estimate that the sukuk, which has around Tk2,800 crore outstanding now, could generate around Tk3,600 crore in revenue over an additional 72 months.

ICB estimates also show that approximately seven months remain before the current maturity period expires. During this period, the project is expected to generate around Tk350 crore in additional revenue, while nearly Tk600 crore has already accumulated in the sinking fund.

Officials believe these funds, combined with cash flows generated during the extended tenure, would allow full repayment to investors within the revised maturity period.

Delays and project setbacks

Bangladesh Bank formed a 10-member committee last year to review and restructure the sukuk's terms. The committee included senior officials from Bangladesh Bank, ICB, the Bangladesh Securities and Exchange Commission, the Bangladesh Power Development Board and several leading banks.

The country's first asset-backed Shariah-compliant corporate green sukuk was issued by Beximco Ltd in 2021 and raised Tk3,000 crore.

Banks and their subsidiaries invested Tk2,439 crore through private placements, while Tk558 crore was raised through public offerings.

Of the total proceeds, Tk2,155 crore was ultimately spent on the Teesta Solar Plant against an original allocation of Tk1,886.83 crore. Another Tk39 crore was spent on the Korotoa Solar Project against an allocation of Tk308.31 crore, while Tk806 crore was used for textile expansion.

The Korotoa plant, planned as a 30MW solar project, had been expected to begin operations by June 2026. However, a fire during the August 2024 unrest damaged its transformers and site office, delaying implementation further.

The Bangladesh Association of Banks (BAB) has called for a reconsideration of certain provisions in the recently enacted Bank Resolution Act, saying that allowing former owners to regain control of troubled lenders through a limited upfront payment could raise concerns over accountability, governance and moral hazard.

The plea was made during a meeting between a BAB delegation led by Chairman Abdul Hai Sarker and Bangladesh Bank Governor Md Mostaqur Rahman at the central bank headquarters in Dhaka yesterday.

The association, which represents bank sponsors and owners, shared this view as the Bank Resolution Act was passed in the House last month. The revised law included provisions allowing former owners to reclaim merged banks under relatively easy terms.

According to the law, former directors or owners of banks under merger or listed for merger can pay 7.5 percent upfront of the amount injected by the government or the BB to regain control. The remaining 92.5 percent is to be repaid within two years at 10 percent simple interest.

While welcoming the government’s initiative to establish a structured resolution framework, BAB said the mechanism should ensure a strong “fit and proper” assessment, forensic audits, verification of fund sources and transparent regulatory oversight.

As part of its banking reform initiatives, the interim government approved the Bank Resolution Ordinance 2025. Under it, five crisis-hit lenders -- First Security Islami Bank, Global Islami Bank, Union Bank, Social Islami Bank and EXIM Bank -- were brought under the merger process.

The BB later issued a licence for a new state-owned entity, Sammilito Islami Bank PLC, in November last year, which is expected to become the country’s largest state-owned shariah-based lender.

A delegation of Bangladesh Association of Banks (BAB), led by its Chairman Abdul Hai Sarker, meets Bangladesh Bank Governor Md Mostaqur Rahman at the central bank headquarters in Dhaka yesterday. Photo: courtesy
After the Bangladesh Nationalist Party (BNP) came to power following the national election in February, the ordinance was amended and enacted as the Bank Resolution Act 2026.

Subsequently, five sponsor shareholders and former directors of troubled Social Islami Bank PLC applied to regain control of the shariah-based lender. However, senior BB officials told The Daily Star last week that the request was likely to be rejected as the merger process moves ahead.

Against this backdrop, BAB said international investors, development partners and global financial institutions closely monitor the credibility of financial sector resolution frameworks.

“Any perception of weak accountability may negatively affect investor confidence, depositor sentiment, and international financial perception regarding Bangladesh,” the association said.

It added that depositor protection, governance reform, financial discipline, transparency and long-term institutional stability should be prioritised in any resolution process.

BAB also urged the BB to consult it before finalising proposed amendments to the Bank Company Act, saying the changes could have a significant impact on board governance, capital raising, sponsor shareholding structures, independent director frameworks and management accountability.

The association said the banking sector is going through one of its most difficult periods.

“Elevated non-performing loans, provisioning and capital adequacy pressures, weak private sector credit growth, legal recovery bottlenecks, rising cost of funds, declining investor confidence, and global economic uncertainties continue to place significant stress on the sector.”

It added that the sector is suffering from broader confidence challenges.

“Public confidence, depositor trust, investor confidence, and international perception regarding governance, transparency, and institutional accountability within the banking sector are now critical issues requiring coordinated and balanced action.”

BAB urged the central bank to retain existing incentive bonuses for bankers in order to help banks retain skilled professionals. It also called for access to the BB’s refinance schemes for banks with non-performing loan ratios below 20 percent.

The association further pressed for changes in rules on income recognition, classification and provisioning, arguing that current requirements place undue pressure on capital buffers and restrict credit flow. It suggested allowing interest income recognition after the expiry of grace periods.

On rescheduled loans, BAB said existing classification and provisioning rules significantly increase risk-weighted assets and capital adequacy pressures, limiting banks’ ability to extend fresh lending to productive sectors.

It also proposed the creation of a professionally managed national Asset Management Company (AMC) to acquire classified loans, support restructuring and assist sector recovery, citing examples from Malaysia, South Korea and Indonesia.

On legal recovery challenges, BAB said the process for recovering defaulted loans remains slow and complex owing to case backlogs, delayed hearings, misuse of stay orders and weak enforcement of judgments.

To overcome this, BAB proposed amendments to the Artha Rin Adalat Ain to include ultimate beneficiaries and beneficial owners, the introduction of fast-track financial courts and dedicated recovery benches, along with mandatory hearings before stay orders are issued and time-bound limits on such orders.

“A major challenge currently faced by banks relates to accounts where courts direct loans to remain unclassified while regulatory inspections require provisioning treatment as ‘bad and loss’,” it said.

BAB said this creates inconsistencies in provisioning, affects profitability, increases capital stress and reduces lending capacity. It called for separate regulatory treatment for loans under litigation or stay orders, along with a phased provisioning framework.

“Such an approach will improve regulatory consistency while maintaining prudential discipline,” said the association.

Bangladesh Bank (BB) has allocated Tk 10 billion (Tk 1,000 crore) from its revolving Green Transformation Fund (GTF) for rural and local industrial sectors to promote environmentally sustainable industrialisation and accelerate green growth across the country.Bangladesh Investment Guide
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The initiative is aimed at supporting small-scale and regional entrepreneurs in acquiring environment-friendly machinery and components to transform local industries into greener and more sustainable production units, said a BB circular issued.

According to the circular, the central bank had earlier formed a revolving Green Transformation Fund amounting to Tk 50 billion (Tk 5,000 crore) from its own resources to support sustainable growth in manufacturing and export-oriented industries.

The newly earmarked Tk 10 billion (Tk 1,000 crore) has now been reserved exclusively for rural and local industrial enterprises in an effort to decentralise green industrialisation and expand sustainable economic activities beyond major urban centers.

Under the refinance scheme, participating financial institutions (PFIs) will receive funds from Bangladesh Bank at an interest rate of only 1 percent, while the maximum interest rate at the customer level has been fixed at 5 percent.

The loan tenure will range from two to five years depending on the nature of the project, while entrepreneurs will also be allowed a grace period of up to six months subject to the relationship between the borrower and the participating bank.Economic Trend Reports

The facility will support projects related to renewable energy, energy efficiency, water conservation and management, waste management, resource efficiency and recycling, and initiatives aimed at improving workplace environments.

Through these measures, the central bank intends to encourage the adoption of green technologies and sustainable production practices at the grassroots industrial level.

According to the circular, the maximum loan amount for a single borrower has been fixed at Tk 5 crore. The debt-equity ratio must not exceed 80:20 of the total import or purchase cost.

In addition, at least 10 percent of the total electricity consumption of financed projects must come from renewable energy sources.

Bangladesh Bank also imposed strict eligibility conditions for borrowers. Loan defaulters will not qualify for the scheme, and participating banks must verify updated Credit Information Bureau (CIB) reports of borrowers and all related interests before approving any financing.

All state-owned commercial banks will be eligible to participate as PFIs under the scheme. Private and foreign commercial banks, however, must maintain classified loan rates below 20 percent to qualify. Islamic Shariah-based banks have also been allowed to participate through their approved investment mechanisms.Financial Literacy Course

Banks interested in joining the programme will have to sign a “Participation Agreement” with the Sustainable Finance Department, although banks already operating under existing GTF agreements will not require new agreements.

The circular, issued under Section 45 of the Bank Company Act, 1991 (amended in 2023), came into effect immediately.

To ensure accountability and transparency, participating financial institutions will be required to submit quarterly reports to the Sustainable Finance Department within 15 days after the end of each quarter.

Bangladesh Bank warned that fines may be imposed for providing false information or failing to comply with reporting requirements.

Prime Minister Tarique Rahman has assured garment exporters that the government will reopen all closed public and private factories across the country and provide support to struggling factories to prevent further closures.

However, state-owned closed factories will not be run directly by the government. Instead, they will be reopened through interested Bangladeshi entrepreneurs.

Leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) shared the information with TBS after separate meetings with the prime minister at the Secretariat today (11 May).

After the meetings, top executives of BGMEA and BKMEA said the prime minister had asked for written proposals, after consulting factory owners, outlining what policy support is needed to reopen closed factories and rescue those on the verge of closure.

The two associations are expected to submit their written proposals after Eid-ul-Adha.

They said the prime minister placed the highest emphasis on employment generation. For that reason, he wants all closed factories in both the public and private sectors to reopen and also wants policy support for factories facing closure.

BKMEA Senior Vice-President Fazlee Shamim Ehsan, who attended the meeting, said the prime minister clearly mentioned two conditions for reopening state-owned factories through private management: they must be operated by Bangladeshi entrepreneurs, and they must produce the same products previously manufactured there.

There is no exact data on how many factories remain closed nationwide. After taking office, the BNP government initiated a Tk40,000 crore fund through Bangladesh Bank to help reopen closed factories. Around 300 garment factories are reportedly at risk of closure.

After the meeting, BGMEA President Mahmud Hasan Khan and BKMEA President Mohammad Hatem told The Business Standard they had requested that factories on the verge of closure also be given access to the fund.

They said the prime minister also wants to ensure no additional factories shut down and confirmed that vulnerable factories would receive assistance.

"The prime minister clearly told us that all closed factories will be reopened, and the government will provide every possible policy support to prevent any new closures. He also informed us of plans to reopen closed state-owned factories through privatisation," said BKMEA Senior Vice-President Fazlee Shamim Ehsan.

BKMEA President Mohammad Hatem told the prime minister that no entrepreneur would expand investment or bring in new investment unless gas and electricity supply improves.

He also requested removal of complexities surrounding the import of raw materials for man-made fibre and raw materials used in locally produced auxiliary chemicals.

The BGMEA delegation, led by President Mahmud Hasan Khan, met the prime minister first, followed by the BKMEA delegation led by President Mohammad Hatem. Each meeting lasted around an hour.

They informed the prime minister that identical support measures for all closed factories would not work, as each factory faces different problems. In response, the prime minister asked them to speak with factory owners individually and submit written reports detailing each case.

BGMEA President Mahmud Hasan Khan said, "The government cannot waive taxes or hand out money. But the prime minister asked us to submit written proposals on what type of policy support each factory needs so they can continue operations and preserve jobs. We will submit these after Eid."

He added that all duties and taxes on imports of equipment and batteries used for solar power generation and storage would be fully withdrawn.

BKMEA Senior Vice-President Fazlee Shamim Ehsan said, "The prime minister does not want foreign companies to run closed state-owned factories. He wants local entrepreneurs to operate them. But they must produce the same goods as before and meet international standards. Through this, the prime minister wants export diversification."

BKMEA President Mohammad Hatem said that during discussions on export diversification and reopening closed factories, the prime minister said anyone interested in reopening the Rajshahi silk factory should inform him.

He said the factory could be modernised to produce world-class silk products for export.

BGMEA President Mahmud Hasan Khan said the prime minister also stressed building export-oriented market networks, improving the business environment and diversifying exports.

"We told the prime minister that several Bangladesh Bank policies are pushing many operating factories towards closure. There are complications in accessing bonded warehouse facilities, and many factories are facing audit-related problems. We also highlighted barriers to simplifying import-export procedures.

"After receiving our written recommendations, the prime minister assured us that policies would be revised to simplify import-export procedures and improve the overall business climate," said BKMEA President Mohammad Hatem.

Commerce Minister Khandaker Abdul Muktadir, Housing and Public Works Minister Zakaria Taher, and Education Minister Ehsanul Haque Milon were present at the meetings

The Bangladesh Semiconductor Industry Association (BSIA) began a four-day roadshow in South Korea yesterday, bringing together industry, academia, and government representatives to strengthen bilateral semiconductor collaboration.

The roadshow, running May 11-14, forms part of the Silicon River vision, which seeks to advance Bangladesh’s semiconductor and deep-tech sector through global partnerships, reads a BSIA press statement.

During the roadshow, the Bangladeshi delegation will meet major players across Korea’s semiconductor ecosystem, including SK hynix, HANA Micron, KAIST’s Global Commercialization Center (GCC), ETRI, and McKinsey & Company.

The discussions will specifically focus on critical areas of development, including packaging, AI hardware, design, testing, and commercialisation.

A key highlight of the event is a Letter of Intent signing between BSIA, the Center of Research Excellence in Semiconductor Technology (CREST), and KAIST’s GCC, aimed at advancing joint research, talent development, and technology commercialisation, according to the press release.

“Our objective is to learn from Korea’s remarkable semiconductor journey while building meaningful long-term partnerships in research, talent development, commercialisation, and industrial collaboration,” said BSIA President MA Jabbar.

The country's banking sector posted robust profits in 2025 despite a sharp slowdown in private sector lending as higher returns from government treasury securities increasingly replaced traditional business lending as the sector's main source of income, raising concerns among economists and bankers over the sustainability of the model.

Several private banks, including BRAC Bank, City Bank, Midland Bank, Prime Bank and Jamuna Bank, reported strong profit growth during the year, driven largely by investments in government securities that offered comparatively risk-free returns amid weak demand for loans from businesses.
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According to published financial statements compiled by financial advisory firm Lion City Advisory, several banks posted strong earnings, with BRAC Bank and City Bank both crossing the Tk1,000 crore mark in 2025.

BRAC Bank recorded the highest net profit in the sector, posting Tk2,250 crore in 2025, up 57% from Tk1,432 crore a year earlier. The bank's investment in government treasury securities rose to Tk40,647 crore in 2025 from Tk28,671 crore a year ago, accounting for 31% of its total assets. Treasury investments contributed 32% of its total income during the year.
City Bank reported a consolidated net profit of Tk1,324 crore in 2025, marking a 31% increase from Tk1,014 crore in 2024. The bank's treasury investment rose sharply to Tk19,125 crore from Tk12,487 crore a year earlier, representing 23% of its total assets. Treasury operations accounted for 35% of the bank's income in 2025.

Jamuna Bank invested Tk19,402 crore in treasury securities, accounting for 45% of its total assets, up from Tk12,411 crore in 2024. The bank generated 23% of its operating income from lending to the government.Midland Bank increased its treasury investment to Tk3,273 crore in 2025 from Tk2,127 crore a year earlier, with government securities accounting for 26% of its total assets. Treasury income contributed 37% of the bank's total income during the year.
NCC Bank also significantly expanded its exposure to government securities. Its investment in treasury securities rose to Tk9,100 crore at the end of December 2025 from Tk6,591 crore a year earlier. The bank earned Tk609 crore from treasury operations in 2025, accounting for 21% of its operating income.

Shift towards government securities

Bankers say the combination of high lending rates, weak business confidence and global uncertainty has discouraged private sector borrowing and pushed banks towards safer investment instruments.

According to Bangladesh Bank data, private sector credit growth fell to 6.03% in February, the lowest level in 21 years. The figure declined from 6.1% in December and remained far below the 10.13% growth recorded in July 2024.

Although credit growth briefly rose to 6.58% in November, analysts attributed the increase to loan restructuring ahead of the 12 February national election rather than fresh investment in productive sectors.

At the same time, government borrowing from the banking system accelerated sharply.

Data from Bangladesh Bank, the Centre for Policy Dialogue and the Asian Development Bank show that total banking sector deposits rose to Tk21 lakh crore at the end of December 2025 from Tk18.83 lakh crore a year earlier, representing an increase of 11.57%.

Meanwhile, banks' investment in treasury bills and bonds surged more than 40% year-on-year to Tk5.38 lakh crore from Tk3.82 lakh crore.

Total banking sector assets stood at Tk28.09 lakh crore at the end of 2025, growing by only 6% compared with the previous year.

Ershad Hossain, director at Putnam Capital Advisory Pte Ltd, said banks were increasingly moving away from lending to businesses and relying heavily on government securities offering yields of around 10% to 12%.

"Private sector credit growth has dropped to 6.03%, a 21-year low, while government borrowing from banks has surged by 24%, exceeding the central bank's ceiling," he said.

"This shift has fundamentally altered banks' income structure, with the majority of operating income now coming from government securities rather than traditional lending."

He also warned that the trend is already affecting the broader economy. Imports of capital machinery, a key indicator of industrial investment, fell 10.43% between July 2025 and March 2026, while banks now hold 67% of public debt. He added that the sector's capital adequacy ratio had dropped to 1.53%, far below the minimum regulatory requirement of 12.5%.

Concerns over crowding out

Economists have warned that excessive government borrowing from banks could crowd out private sector investment by reducing the availability of credit for businesses.

They say prolonged dependence on treasury income could weaken industrial expansion, slow job creation and reduce long-term economic growth.

City Bank Managing Director Mashrur Arefin described the rise in treasury investments at the expense of loan growth as "a major negative signal" for the economy.

"Over the past year, there has been virtually no alternative to making profits from treasury bills because businesses are not borrowing," he said.

According to him, political uncertainty, external economic risks and weak investor confidence have discouraged businesses from opening large letters of credit or importing capital machinery. Even borrowers with approved credit limits are not fully utilising them.

He said banks with strong public confidence and stable deposit inflows were placing increasing amounts of liquidity into government securities because demand for corporate loans remained weak.

Mashrur warned that the trend was not sustainable in the long run.

"If credit growth does not recover, economic growth will eventually slow and banks themselves will suffer," he said.

He added that City Bank is shifting focus towards small loans, digital nano-credit and microfinance through platforms such as bKash to offset weaker corporate lending demand.

Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, described the growing dependence on treasury income as an "underlying weakness" in the banking sector.

He said a sustainable banking model should rely primarily on financing productive private sector activities and supporting entrepreneurship rather than depending on government borrowing.

"Investment in government securities may be safe, but it does not directly contribute to investment growth or employment generation," he said.

According to him, businesses remain reluctant to borrow because of geopolitical tensions, political uncertainty and an unfavourable business environment.

He said improving logistics support, introducing effective single-window services and reducing the cost of doing business would be necessary to revive private investment and encourage banks to increase lending to productive sectors again.

Abdullah Al Faisal, director at Lion City Advisory Limited, said the growing reliance on treasury income reflected rising risk aversion among banks and weakening credit demand.

"Such income is non-core and highly sensitive to interest rates, making bank profitability less sustainable over time," he said.

Economists and bankers alike caution that while treasury investments currently offer attractive and secure returns with virtually no default risk, the continued shift away from productive lending could weaken the banking sector's long-term role in supporting economic growth.

Bangladesh's foreign exchange reserves have fallen below the $30 billion mark following the latest payment to the Asian Clearing Union (ACU).

Bangladesh Bank spokesperson and Executive Director Arief Hossain Khan today (10 May) said that the country's reserves stood at $29.48 billion under the BPM-6 calculation method.

"According to BPM-6, the central bank's reserves now stand at $29.48 billion, down from $30.96 billion reported on 7 April," he said.

The ACU is a regional payment arrangement that facilitates settlement of import transactions among its nine member countries – Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka.

The payment mechanism allows the member states' central banks to settle eligible cross-border transactions on a multilateral basis. ACU payments are made every two months.

Bangladesh’s foreign exchange market came under mild pressure in March as heightened global uncertainty stemming from the Middle East war situation pushed up exchange-rate volatility and interbank dollar transactions, according to a monthly report by the central bank.

The interbank exchange rate rose to Tk 122.75 per dollar at the end of March from Tk 122.30 per dollar at the end of February 2026, reflecting marginal depreciation.

However, on a year-on-year basis, the movement in the exchange rate resulted in a nominal depreciation of 0.61 percent against the US dollar, said the report on exchange rate and foreign exchange market dynamics.

The variability in the exchange rate increased considerably, and rates moved within a wider range in March 2026 after a period of low variability since December 2025, according to the report published yesterday.

The Bangladesh Bank report said that while the spread in the interbank market and in the bank’s sales to clients remained stable, the spread in the bank’s purchase from the client market edged up on average to Tk 1.19 per US dollar in March from Tk 0.99 per dollar in February.

The global economic uncertainty stemming from the Middle East was propagated through the foreign exchange market, as reflected in the daily average spread of spot exchange rates, defined as the daily maximum minus minimum rate, said the report.

At the same time, the volume of daily average spot transactions rose to $62.17 million in March from $37.27 million in February as banks increased dollar trading amid growing global economic uncertainty.

“An increase in exchange rate flexibility and a rise in liquidity in the foreign exchange market led to a rise in interbank spot foreign exchange transaction volume on average in March 2026, with some fluctuation in daily transactions,” said the report.

At the same time, the volume of swap transactions edged up markedly during the period. The average daily swap transaction doubled to $100.82 million in March from $53.54 million in February.
As such, the share of swap transactions in total interbank transactions rose to 62 percent in March from 59 percent in February. By contrast, the share of spot transactions declined.

The Bangladesh Bank said swap transactions increased at a faster rate than spot transactions amid growing war-driven uncertainties.

The report said that since the foreign exchange market has experienced gentle pressure, the central bank reduced the pace of its foreign exchange purchases in March to only $25 million, far lower than $1.53 billion in February, “as a part of cautious and prudent market management.”

The country's premier bourse, the Dhaka Stock Exchange (DSE), extended its losing streak for the fourth consecutive session today (10 May), as a lack of favourable catalysts and persistent selling pressure on major large-cap scrips dampened investor sentiment.

The benchmark index opened the week on a dismal note, resulting in a significant erosion of the market's total valuation. In the last four consecutive sessions, the market capitalisation of the Dhaka bourse dropped by approximately Tk9,800 crore, settling at Tk6.76 lakh crore.

The benchmark DSEX index shed 13 points today, or 0.25%, to close the session at 5,220. The downturn was more pronounced in the blue-chip segment, with the DS30 index slipping by 11 points to reach 1,990.

The market breadth remained negative, as 194 issues declined compared to 161 that managed to advance, while 39 scrips remained unchanged on the DSE floor.

According to the daily market review by EBL Securities, market participants are currently adopting a cautious "wait-and-see" approach, monitoring for a major catalyst that could drive a persistently favourable momentum. The market witnessed sustained selling pressure across influential stocks, although participation remained evident as some investors shifted their focus toward small-cap and momentum-driven scrips.

Trading activity saw a notable contraction, with daily turnover on the DSE dropping by 14% to stand at Tk727 crore.

On the sectoral front, the engineering sector accounted for the highest share of turnover at 13.8%, followed closely by general insurance and the textile sector, both contributing 13.1%.

In terms of returns, the mutual fund sector emerged as the top performer, posting a substantial 6.7% gain. This rally was primarily driven by the regulatory directive for converting closed-end mutual funds into open-end structures, which triggered fresh buying interest across the segment. The tannery and jute sectors also managed to exert positive returns of 2.7% and 1.5%, respectively.

Conversely, sectors such as paper, ceramics, and textiles faced the steepest corrections, with the paper sector declining by 1.7%.

Individual stock performance reflected the day's volatility. The top gainers' list was heavily dominated by mutual funds, with AB Bank First Mutual Fund, First Bangladesh Fixed Income Fund, IFIL Islamic Mutual Fund, and PHP First Mutual Fund all hitting the 10% upper circuit limit. Continental Insurance also surged by 10% to join the top gainers.

On the flip side, Saiham Cotton was the top loser, shedding 5.60% of its value, followed by Alif Manufacturing, Sonar Bangla Insurance, Peoples Leasing, and Mir Akhter.

Liquidity was concentrated in a few specific scrips, with Monno Ceramic, Dominage Steel, BD Thai Food, Summit Alliance Port, and Apex Spinning emerging as the most traded stocks of the day.

The bearish sentiment was mirrored at the Chittagong Stock Exchange (CSE), where the key indices also ended in the red. The broad CASPI index dipped by 56 points to close at 14,646, while the CSCX ended 35 points lower at 9,012. Trading volume at the port city bourse remained relatively low, with turnover standing at Tk14.94 crore.

The government is set to implement the much-anticipated Padma barrage project at an initial cost of Tk 33,474 crore, aimed at reviving five major river systems and storing 2,900 million cubic metres of water in the Padma river.

The project, to be executed in two phases by 2033, will require a total investment of nearly Tk 50,443 crore.

Covering about 37 percent of Bangladesh’s land area, spanning 26 districts and 163 upazilas across four divisions, the Padma-dependent region has long suffered from water shortages due to upstream diversions.

The barrage is expected to be a game-changer for agriculture, fisheries, biodiversity, and economic growth.

The project gained momentum after a meeting on May 6 with Prime Minister Tarique Rahman, where he highlighted the project’s potential impact on GDP and gave directives for its implementation.

The feedback was incorporated and the proposal for the first phase is set to be placed before the Executive Committee of the National Economic Council on Wednesday for approval.

The first phase would be paid from the government’s own funds and it includes the construction of the 2.1km-long Padma barrage at Pangsha in Rajbari district.

The barrage will feature 78 spillways, 18 undersluice gates, two fish passes, a navigation lock, guide bunds, and approach embankments.

Hydropower plants will be set up at Padma barrage and Gorai off-take, which is the crucial entry point of the Gorai-Madhumati river. The plants will generate 113 megawatts of electricity.

The first phase also includes the dredging and re-excavation of the 135.6km Gorai-Madhumati river and 246.46km Hisna river systems.

The other works include Gorai off-take with 15 spillways, fish pass, navigation lock, and hydro-power plant (36.6 megawatt); Chandana off-take (four spillways); Hisna off-take (five spillways); and construction 180km afflux bund.

The Hisna off-take, often referred to in conjunction with the Hisna-Mathabhanga river system in Bangladesh, is a critical component in water management designed to restore flow from the Ganges river system.

The off-take is part of wider efforts to combat silting and ensure water supply during the lean season, acting as a crucial channel for diverting water into regional rivers like the Hisna.

However, activities under the first phase will directly benefit 19 districts and 120 upazilas in four divisions: Khulna (Kushtia, Meherpur, Chuadanga, Jhenaidah, Magura, Jashore, Narail, Bagerhat, Khulna, Satkhira), Dhaka (Rajbari, Faridpur, Gopalganj), Rajshahi (Pabna, Rajshahi, Natore, Naogaon, Chapainawabganj) and Barishal (Barishal, Pirojpur).

The second phase includes construction of additional supportive infrastructure and restoration of Chandana-Barasia, Baral and Ichhamati river systems.

Five river systems -- Hisna-Mathabhanga, Gorai-Madhumati, Chandana-Barasia, Baral and Ichhamati -- would be revived.

The revived river flows will reduce salinity intrusion in the southwest, restore biodiversity in the Sundarbans, and improve drainage and irrigation.

It would ensure water supply to the Ganges-Kobadak (GK) Irrigation Project, the North Rajshahi irrigation project, Godagari pump house, and Rooppur nuclear power plant.

The project would ensure irrigation for 2.88 million hectares of net cultivable land and boost the annual production of rice by 2.39 million tonnes and fish by 2.34 million tonnes.

The idea of a barrage on the Padma dates back decades.

Between 1960 and 2000, four studies were conducted to identify suitable sites. In 2005, a detailed feasibility study was launched, completed in 2013 by a consortium of local and foreign consultants.

The study highlighted dry-season water scarcity due to upstream withdrawals at India’s Farakka Barrage, which has severely reduced flows in Bangladesh, drying up river systems and damaging agriculture, fisheries, navigation, and biodiversity.

Mutual funds rallied strongly today (10 May) after the Bangladesh Securities and Exchange Commission (BSEC) issued detailed guidelines for converting closed-end mutual funds into open-end structures, raising investors' expectations of improved liquidity and potential valuation gains.

All but one listed mutual fund closed higher during the session, while eight mutual funds secured spots among the top-10 gainers on the Dhaka Stock Exchange (DSE).

Market participants said the latest regulatory move has revived interest in the long-struggling mutual fund sector, where most closed-end funds have traded at steep discounts to their net asset value (NAV) for years.

Last Thursday, the securities regulator issued a comprehensive framework for converting closed-end mutual funds that face liquidation risks or mandatory transition into open-end structures.

Under rules published in the official gazette on 12 November last year, trustees of closed-end mutual funds must convene a special general meeting (SGM) if the average trading price of a fund remains over 25% below the higher of its issue price or fair-value-based NAV for six consecutive months.

At the SGM, unit holders will decide through secret ballot whether the fund will continue operations, convert into an open-end structure, or be liquidated. Approval from at least 75% of participating unit holders will be required.

The six-month compliance deadline expires on 12 May. Funds failing to meet the requirements after that date may have to initiate liquidation or conversion procedures.

According to market insiders, nearly 22 out of the country's 34 listed closed-end mutual funds may fall under the new regulatory framework because their market prices are currently trading more than 25% below their declared asset values.

An analyst at a leading brokerage house, requesting anonymity, said institutional investors are anticipating short-term gains from deeply discounted mutual funds, as conversion or liquidation prospects could help reduce the gap between market prices and underlying asset values.

"Strong buying pressure emerged in the mutual fund sector from the start of trading on Sunday," the analyst said.

Among the top performers, IFIL Islamic Mutual Fund-1 surged 10% to close at Tk4.40. At the same time, First Bangladesh Fixed Income Fund, PHP First Mutual Fund, AB Bank 1st Mutual Fund and Trust Bank 1st Mutual Fund each gained 10% to close at Tk3.30.

Meanwhile, NCCBL Mutual Fund-1 advanced 9.76% to Tk4.50, while EBL NRB Mutual Fund and LR Global Bangladesh Mutual Fund One rose 9.68% each to close at Tk3.40.

On the other hand, SEML FBLSL Growth Fund climbed 9.62% to Tk5.70, while Prime Bank 1st ICB AMCL Mutual Fund gained 8.89% to close at Tk4.90.

The latest BSEC directive provides detailed instructions regarding conversion timelines, valuation methods, voting structures, cost limitations, and investor rights.

The regulator has introduced a structured compliance framework involving trustees, asset managers, custodians, stock exchanges and depository institutions throughout the conversion process.

To prevent possible market manipulation, trading of fund units will remain suspended immediately after the announcement of the record date for voting.

If unit holders approve a conversion proposal, all assets, liabilities and management control of the fund will be transferred to the trustee, who will oversee and safeguard the assets until the process is completed.

The rules also make independent valuation mandatory. External auditors with no affiliation to the fund, trustee or asset manager will assess asset values, NAV and the financial condition of the fund before submitting separate valuation reports.

Following conversion, a newly structured open-end mutual fund will be required to issue a fresh prospectus, trust deed, and management agreement. Units of the new fund will be held in dematerialised form and traded or redeemed through stock exchanges.

Market participants believe the transition could significantly improve liquidity in the mutual fund sector by allowing investors to redeem units more easily than under the existing closed-end structure.

The regulator has also capped conversion-related costs at 1% of total fund size. Asset managers will be allowed to charge a maximum fee of 0.50%, while trustees can receive up to Tk1 million per scheme.

Additionally, trustees must obtain board approval at least 150 days before fund maturity or planned conversion. Once approved, price-sensitive information (PSI) must be disclosed through newspapers, online platforms and stock exchanges.

Market analysts believe the new regulations could reshape Bangladesh's mutual fund industry in the coming months, with nearly two-thirds of listed closed-end funds potentially facing consolidation, liquidation or structural transformation.

However, analysts cautioned that fund managers may face short-term operational challenges in adapting to stricter compliance requirements, valuation standards and investor voting procedures.

BSEC Director and spokesperson Abul Kalam told TBS that the open-end structure would offer greater flexibility and improved liquidity for investors, as units could be redeemed more easily.

He added that many closed-end mutual funds had long traded at substantial discounts to NAV, raising investor concerns over valuation practices and governance transparency.

According to him, the latest reform aims to address those long-standing inefficiencies by creating a more transparent and flexible exit mechanism for unit holders.

The Japan-Bangladesh Chamber of Commerce and Industry (JBCCI) has urged the government to undertake major VAT and tax reforms in the upcoming FY2026-27 budget, including introducing a single VAT rate, withdrawing minimum tax for loss-making companies and lowering corporate tax to attract investment.

Speaking at a pre-budget press conference in Dhaka today (10 May), JBCCI President Tareq Rafi Bhuiyan said Bangladesh is going through a critical economic transition amid global uncertainty, inflationary pressure, rising financing costs and preparations for post-LDC graduation.

In this context, he said, the national budget should prioritise investment, industrial competitiveness and fiscal modernisation instead of focusing mainly on revenue collection.

One of the chamber's key recommendations was reducing the standard VAT rate from 15% to 7.5% and introducing a unified VAT structure.

According to JBCCI, the existing multi-tier VAT system increases compliance costs, creates complexity and leads to classification disputes between businesses and tax authorities.

"A simplified VAT framework would improve the ease of doing business, particularly for SMEs and emerging industries," the chamber said.

JBCCI also called for the withdrawal of the minimum tax based on gross receipts for businesses incurring losses.

The chamber argued that the current system places additional financial pressure on companies even when they are not profitable, discouraging investment and affecting business sustainability.

It further proposed removing withholding tax obligations for loss-making firms and ensuring that excess tax deducted at source remains refundable.

Maria Haowlader, general secretary of the chamber, said delays in VAT and income tax refunds often create liquidity pressure and block working capital for businesses.

To address this, the chamber recommended introducing a faster, automated and time-bound refund mechanism to improve business confidence and tax compliance.

The business chamber also proposed reducing the corporate tax rate for the private sector from 25% to 20% to strengthen Bangladesh's competitiveness in attracting both local and foreign investment.

It noted that many competing economies are adopting lower corporate tax regimes to attract foreign direct investment, while Bangladesh's comparatively high tax burden discourages industrial expansion and capital inflow.

JBCCI further recommended rationalising Tax Deducted at Source (TDS) and withholding tax rates for suppliers, subcontractors, service providers, rental payments and foreign service providers.

According to the chamber, excessive advance and withholding taxes increase working capital pressure and raise the overall cost of doing business.

The chamber also sought reductions in customs duty, regulatory duty, advance tax and advance income tax on industrial raw materials, renewable energy equipment, healthcare products and manufacturing inputs to improve industrial competitiveness.

In addition, JBCCI proposed sector-specific fiscal support for industries including ready-made garments, information technology, pharmaceuticals, construction, agriculture and healthcare.

The recommendations include lower source tax on exports, tax holidays for strategic industries, VAT exemptions on machinery and raw materials, and incentives for green and sustainable investments.

To move the country's capital market beyond its share-dependent structure, the regulator and Chittagong Stock Exchange (CSE) have intensified efforts to launch a commodity derivatives market.

Stakeholders say commodity derivatives could open a new horizon by introducing new products, risk management tools and a modern price discovery framework. However, the initiative has been delayed several times due to gaps in technology, legal readiness, broker preparedness and policy coordination.

These issues were highlighted at a workshop titled Commodity Exchange: Potential, Structure and Future, jointly organised in the capital on Sunday by the Capital Market Journalists' Forum and Chittagong Stock Exchange.

Speaking as chief guest, Bangladesh Securities and Exchange Commission Commissioner Farzana Lalarukh said, "We want to take the capital market to a much higher level. But we also need to understand how prepared we really are. We want to move forward with full readiness."

She said CSE's commodity derivatives regulations were approved at a commission meeting in 2025 and most regulatory work has already been completed. The next phase will begin once the exchange ensures readiness, product selection and operational capacity.

Farzana Lalarukh said the country's capital market has three main pillars – equity, bonds and commodities. However, Bangladesh's market has long remained largely equity-dependent.

Emphasising the responsible role of journalists in avoiding confusion or rumours among the public regarding commodity derivatives, she said, "Your pen is very powerful. Please write about commodities in a way ordinary people can understand. It has to be explained from the basics."

She added, "Some progress is being seen in the bond market. Now we want the derivatives market to develop as well."

She explained that the two major objectives of the derivatives market are price discovery and hedging – meaning creating expectations about future prices and protecting against price risks. She noted that this could play an important role in an agriculture-based economy.

Chittagong Stock Exchange Chairman AKM Habibur Rahman said around Tk100 crore has already been invested to launch the commodity derivatives segment. However, further investment will be needed to make it fully operational.

He said, "We have been preparing for this since 2023. We had hoped to launch it last year, but that was not possible. We expect the segment to become operational within this year."

Chittagong Stock Exchange Managing Director Saifur Rahman Mazumder said the country's stock market is still operating mainly as a "simple equity market". Introducing derivatives or commodity products like developed markets would require major changes in the technological and regulatory framework.

He said the country's exchange technology is still heavily dependent on foreign sources. Since advanced trading platforms, servers, software and hardware are import-dependent, both time and costs have increased.

"We completed most of the technological preparations around one and a half years ago. But we could not move forward because of some legal and coordination-related limitations," he said.

CSE Managing Director Saifur Rahman Mazumder acknowledged that the project had been delayed due to a lack of coordination among different agencies and stakeholders.

In his view, "To create a new market, the regulator, exchange, brokers and government all need to work together. No new product can succeed without a coordinated effort."

He added that launching the commodity market would require new types of brokers, authorised traders and a separate legal framework. Preparatory work is still ongoing.

Stakeholders said cash-settled futures trading in comparatively simple products will be introduced first. Later, essential agricultural products such as rice and wheat are also planned to be included.

According to stakeholders, the country's capital market has long suffered from weak confidence, low liquidity and a limited range of products. In that context, commodity derivatives could create new opportunities. However, success will require equal emphasis on technological capability, strict regulation, skilled participants and investor awareness.

The workshop was chaired by Capital Market Journalists' Forum President Monir Hossain, while CMJF Secretary Ahsan Habib moderated the event

Bangladesh has failed to capture a significant share of China's declining apparel exports to the United States despite sharp tariff-driven falls in Chinese shipments, with much of the diverted business instead moving to Vietnam and Cambodia, according to the latest US import data and industry experts.

Data released by the Office of Textiles and Apparel show that US apparel imports fell nearly 12% year-on-year during the January-March period of 2026 following the imposition of reciprocal tariffs from mid-2025.

Bangladesh's apparel exports to the US market declined 8.38% during the three months compared with the same period a year earlier.

The decline was not limited to Bangladesh. Eight of the top 10 apparel exporters to the US market recorded lower shipments during the period. However, while exports from China and India fell sharply by 53% and 27%, respectively, Vietnam and Cambodia managed to increase exports by 2.77% and 18%.

Industry experts said the relatively higher tariffs imposed on China and India reduced US imports from those countries, but Bangladesh was not emerging as the primary alternative supplier.

Instead, countries such as Vietnam, Cambodia and Indonesia are capturing a large share of China's lost market.

Sheheb Udduza Chowdhury, vice-president of the Bangladesh Garment Manufacturers and Exporters Association, said China maintains a strong position in man-made fibre apparel, while Vietnam, Indonesia and Cambodia have also developed strong manufacturing capacity in the segment with substantial Chinese investment.

"Since China is facing difficulties because of the additional tariffs, many of those purchase orders are shifting to these countries," he told The Business Standard.

"That is why Bangladesh is not being able to capture the market share left by China."

Mohiuddin Rubel, an apparel industry researcher and former BGMEA director, said countries like Vietnam, Indonesia and Cambodia are effectively utilising Chinese raw materials to consolidate their hold on the market segments China is being forced to vacate.

US apparel imports decline

According to Otexa data, the United States imported apparel products worth $17.76 billion during January-March 2026, compared with more than $20 billion during the same period a year earlier.
Photo: TBS Infograph
Photo: TBS Infograph

Despite the decline, Vietnam retained its position as the largest apparel exporter to the US market, with exports valued at $39.84 billion.

Bangladesh moved into the second position from February this year, overtaking China for the first time. Bangladesh's exports stood at $2.03 billion, while China's exports fell to $1.69 billion.

Indonesia, India, Cambodia, Mexico, Pakistan and Honduras followed among the leading apparel exporters to the US market.

Exporters expect recovery after June

Bangladeshi apparel exporters said export growth is likely to remain subdued globally, including in the US market, until June, although they expect conditions to improve in the second half of the year.

Sheheb Udduza Chowdhury said export momentum could improve from the months following July.

He said exporters expect the current market uncertainty to ease by then and anticipate a more permanent resolution regarding US reciprocal tariffs, which could help revive demand.

Tariff uncertainty persists after court ruling

Meanwhile, uncertainty surrounding the US reciprocal tariff regime continues after the Trump administration appealed against a court ruling related to the 10% tariff.

International media reported that a US court on 7 May ruled in favour of three companies challenging the tariff. However, exporters said the ruling currently applies only to the three plaintiffs involved in the case.

Reuters reported that the Trump administration filed an appeal against the ruling the following day.

As a result, Bangladeshi exporters said the 10% tariff remains effective until a final judicial decision is reached.

Mohiuddin Rubel said the court had not suspended collection of the tariff entirely and that the verdict was based solely on arguments presented by the three individual plaintiffs.

"The Trump administration filed an appeal on May 8, 2026, against the court's ruling regarding Section 122," he said.

"If the administration's appeal is accepted, importers will not be able to reclaim the 10% tariff. Conversely, if the appeal is denied, those importers will be able to apply for refunds. The same process will apply to others who are applying or preparing to apply."

The country's banking sector posted robust profits in 2025 despite a sharp slowdown in private sector lending as higher returns from government treasury securities increasingly replaced traditional business lending as the sector's main source of income, raising concerns among economists and bankers over the sustainability of the model.

Several private banks, including BRAC Bank, City Bank, Midland Bank, Prime Bank and Jamuna Bank, reported strong profit growth during the year, driven largely by investments in government securities that offered comparatively risk-free returns amid weak demand for loans from businesses.

According to published financial statements compiled by financial advisory firm Lion City Advisory, several banks posted strong earnings, with BRAC Bank and City Bank both crossing the Tk1,000 crore mark in 2025.

BRAC Bank recorded the highest net profit in the sector, posting Tk2,250 crore in 2025, up 57% from Tk1,432 crore a year earlier. The bank's investment in government treasury securities rose to Tk40,647 crore in 2025 from Tk28,671 crore a year ago, accounting for 31% of its total assets. Treasury investments contributed 32% of its total income during the year.
Infograph: TBS
Infograph: TBS

City Bank reported a consolidated net profit of Tk1,324 crore in 2025, marking a 31% increase from Tk1,014 crore in 2024. The bank's treasury investment rose sharply to Tk19,125 crore from Tk12,487 crore a year earlier, representing 23% of its total assets. Treasury operations accounted for 35% of the bank's income in 2025.

Jamuna Bank invested Tk19,402 crore in treasury securities, accounting for 45% of its total assets, up from Tk12,411 crore in 2024. The bank generated 23% of its operating income from lending to the government.

Midland Bank increased its treasury investment to Tk3,273 crore in 2025 from Tk2,127 crore a year earlier, with government securities accounting for 26% of its total assets. Treasury income contributed 37% of the bank's total income during the year.

NCC Bank also significantly expanded its exposure to government securities. Its investment in treasury securities rose to Tk9,100 crore at the end of December 2025 from Tk6,591 crore a year earlier. The bank earned Tk609 crore from treasury operations in 2025, accounting for 21% of its operating income.

Shift towards government securities

Bankers say the combination of high lending rates, weak business confidence and global uncertainty has discouraged private sector borrowing and pushed banks towards safer investment instruments.

According to Bangladesh Bank data, private sector credit growth fell to 6.03% in February, the lowest level in 21 years. The figure declined from 6.1% in December and remained far below the 10.13% growth recorded in July 2024.

Although credit growth briefly rose to 6.58% in November, analysts attributed the increase to loan restructuring ahead of the 12 February national election rather than fresh investment in productive sectors.

At the same time, government borrowing from the banking system accelerated sharply.

Data from Bangladesh Bank, the Centre for Policy Dialogue and the Asian Development Bank show that total banking sector deposits rose to Tk21 lakh crore at the end of December 2025 from Tk18.83 lakh crore a year earlier, representing an increase of 11.57%.

Meanwhile, banks' investment in treasury bills and bonds surged more than 40% year-on-year to Tk5.38 lakh crore from Tk3.82 lakh crore.

Total banking sector assets stood at Tk28.09 lakh crore at the end of 2025, growing by only 6% compared with the previous year.

Ershad Hossain, director at Putnam Capital Advisory Pte Ltd, said banks were increasingly moving away from lending to businesses and relying heavily on government securities offering yields of around 10% to 12%.

"Private sector credit growth has dropped to 6.03%, a 21-year low, while government borrowing from banks has surged by 24%, exceeding the central bank's ceiling," he said.

"This shift has fundamentally altered banks' income structure, with the majority of operating income now coming from government securities rather than traditional lending."

He also warned that the trend is already affecting the broader economy. Imports of capital machinery, a key indicator of industrial investment, fell 10.43% between July 2025 and March 2026, while banks now hold 67% of public debt. He added that the sector's capital adequacy ratio had dropped to 1.53%, far below the minimum regulatory requirement of 12.5%.

Concerns over crowding out

Economists have warned that excessive government borrowing from banks could crowd out private sector investment by reducing the availability of credit for businesses.

They say prolonged dependence on treasury income could weaken industrial expansion, slow job creation and reduce long-term economic growth.

City Bank Managing Director Mashrur Arefin described the rise in treasury investments at the expense of loan growth as "a major negative signal" for the economy.

"Over the past year, there has been virtually no alternative to making profits from treasury bills because businesses are not borrowing," he said.

According to him, political uncertainty, external economic risks and weak investor confidence have discouraged businesses from opening large letters of credit or importing capital machinery. Even borrowers with approved credit limits are not fully utilising them.

He said banks with strong public confidence and stable deposit inflows were placing increasing amounts of liquidity into government securities because demand for corporate loans remained weak.

Mashrur warned that the trend was not sustainable in the long run.

"If credit growth does not recover, economic growth will eventually slow and banks themselves will suffer," he said.

He added that City Bank is shifting focus towards small loans, digital nano-credit and microfinance through platforms such as bKash to offset weaker corporate lending demand.

Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, described the growing dependence on treasury income as an "underlying weakness" in the banking sector.

He said a sustainable banking model should rely primarily on financing productive private sector activities and supporting entrepreneurship rather than depending on government borrowing.

"Investment in government securities may be safe, but it does not directly contribute to investment growth or employment generation," he said.

According to him, businesses remain reluctant to borrow because of geopolitical tensions, political uncertainty and an unfavourable business environment.

He said improving logistics support, introducing effective single-window services and reducing the cost of doing business would be necessary to revive private investment and encourage banks to increase lending to productive sectors again.

Abdullah Al Faisal, director at Lion City Advisory Limited, said the growing reliance on treasury income reflected rising risk aversion among banks and weakening credit demand.

"Such income is non-core and highly sensitive to interest rates, making bank profitability less sustainable over time," he said.

Economists and bankers alike caution that while treasury investments currently offer attractive and secure returns with virtually no default risk, the continued shift away from productive lending could weaken the banking sector's long-term role in supporting economic growth.

The corporate tax rate for the private sector should be reduced to remain competitive in attracting foreign investors and supporting industrial growth, business leaders said yesterday.

“Bangladesh should reduce the corporate tax rate to 20 percent from 25 percent to remain competitive with regional economies such as Vietnam, India, and Indonesia, which attract investment through favourable tax policies,” said Tarek Rafi Bhuiyan Jun, president of the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI).

He made the remarks at a press conference organised by the chamber at Ascott The Residence in Baridhara, Dhaka, yesterday.

Lower corporate tax would spur industrial expansion, create jobs, and boost long-term revenue through increased economic activity, he said.

Japan-Bangladesh Chamber urges government to restore the 15 percent corporate tax rate for the textile sector, which was raised to 25 percent in FY26
The trade body urged the government to restore the 15 percent corporate tax rate for the textile sector, which was raised to 25 percent in FY2025-26, saying the higher rate could hurt export competitiveness and business sustainability.

“The opportunity lies in expanding the tax base and modernising the revenue administration, rather than just increasing the burden on existing compliant taxpayers,” Bhuiyan said.

Simplifying VAT procedures and rationalising tax deducted at source (TDS) rates would improve compliance and ease cash-flow constraints on small and medium-sized enterprises, he added.

Maria Howlader, secretary general of JBCCI, stressed the need for a more predictable and investment-friendly tax regime.

Highlighting the chamber’s direct tax proposals, Howlader said the recommendations focused on corporate tax rationalisation, reforms to TDS, adjustment of advance tax provisions, minimum tax rationalisation, and faster tax refunds.

She also called for relaxing some conditions tied to the 20 percent tax rate for listed companies, saying the existing requirement of maintaining at least 10 percent public shareholding through IPOs and specific banking transaction conditions was impractical.

“Bangladesh has made notable progress, but structural bottlenecks continue to increase the cost and time of doing business, directly affecting trade flows, foreign investment and supply chain reliability,” said Asif A Chowdhury, former president of JBCCI.

According to him, logistics costs in Bangladesh account for around 12 percent to 15 percent of GDP, compared to 8 percent to 10 percent in competing economies.

Focusing on maritime connectivity, Chowdhury said Chittagong Port Authority should introduce 24-hour operations, including nighttime vessel navigation, to reduce congestion and overall costs.

“Targeted reforms in logistics and trade facilitation can significantly reduce the cost of doing business, improve reliability and position Bangladesh as a more attractive destination for foreign trade and investment,” he said.

Manabu Sugawara, former president of JBCCI, expressed optimism over the upcoming national budget, saying the country now has an opportunity to strengthen investor confidence following the signing of the Japan-Bangladesh Economic Partnership Agreement (EPA).

Sugawara said the EPA had reached a crucial stage and was now awaiting ratification by the parliaments of both countries.

He stressed that focus should not be limited to tax collection alone, adding that the effective utilisation of tax revenues was equally important for sustaining economic growth and attracting foreign investment.

Sri Lanka will increase electricity rates by up to 18 percent from Monday to offset the additional costs of generating power using thermal plants due to the Middle East war, the Public Utilities Commission said.

Consumers using more than 180 units (kilowatt hours) of electricity a month will have to pay an additional 18 percent from Monday, while those using less than that will not see their bills affected.

“The increase will apply to industries, hotels, businesses and government institutions and religious places of worship consuming more than 180 units a month,” the commission said in a statement Sunday.

The measure is the latest in a series of steps taken by the island nation following the war in the Middle East.

The latest hike comes on top of a 40 percent tariff increase introduced last month.

Sri Lanka has also raised fuel prices by more than 35 percent and rationed the same following energy supply disruptions.

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

Sri Lanka 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.

It was hit hard by a cyclone last year that killed at least 643 people and affected more than 10 percent of the island’s population of 22 million.

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 posed a serious challenge to recovery efforts.