Nearly one in every two taka lent by the 10 banks among the country's lenders is now considered a risky asset, according to a new central bank report that highlights severe systemic deterioration in the country's banking sector.

The Bangladesh Bank's Financial Stability Report, published on Tuesday (16 June), shows that risky loans at the 10 banks accounted for 47.75% of total lending at the end of December 2025, up from 42.96% in 2024. The report, however, does not identify the specific banks included in the analysis.

Speaking to TBS, experts said the trend reflects long-standing weaknesses in loan governance and recovery practices in the banking sector.

They noted that influential business groups obtained large loans from multiple banks and subsequently failed to repay them on time, contributing to a build-up of non-performing assets over time.

Banking sector insiders said that in several cases, lending rules, including single borrower exposure limits, were not properly followed, particularly in relation to large industrial groups.

They alleged that some groups created shell companies with compliant documentation to access funds, while the ultimate beneficiaries of such loans were not always clearly identified.

They further said that in many cases, both bank boards and officials were aware of the true beneficiaries but did not carry out adequate due diligence.

Bankers said that a combination of regulatory weaknesses and political influence over time allowed certain business groups to accumulate large volumes of credit across multiple banks.

They added that some of these loans later turned non-performing as repayment obligations were not met.

Former Bangladesh Bank governor Ahsan H Mansur had previously said more than Tk1 lakh crore may have been withdrawn from several private banks under the control of a major business group during the previous political administration.

He also said additional borrowing from state-owned banks by Chattogram-based S Alam Group remained largely unpaid.

The Bangladesh Bank has rejected recent media reports claiming that distressed loans in the country's banking sector account for between 45% and 60% of total loans, saying the estimates are based on technically flawed calculations and do not reflect the actual condition of the sector.

In a clarification issued today (17 June), the central bank said the reported figures were inconsistent with the methodology used in its Financial Stability Report (FSR) 2025 and should not be treated as an accurate measure of banking sector risks.

According to the report, the official non-performing loan (NPL) ratio stood at 30.60% as of 31 December 2025. Bangladesh Bank said this audited and finalised figure remains the authoritative measure of the sector's non-performing assets.

The central bank noted that some reports had calculated so-called distressed loans by combining non-performing or classified loans, rescheduled loans and written-off loans.

"It is not appropriate to aggregate these categories in this manner," the regulator said, adding that such calculations are technically incorrect and lead to exaggerated estimates of financial stress in the banking sector.

The Bangladesh Bank further said there is no internationally recognised or standardised definition of "distressed loans" used by global regulatory and policy-making institutions.

While the term is sometimes used broadly to describe loans facing repayment difficulties, the methodology applied in the reports does not conform to accepted regulatory or accounting standards, it added.

Explaining its position, the central bank said rescheduled loans should not automatically be treated as distressed assets because borrowers continue to make repayments under approved restructuring arrangements. These loans remain active assets that generate cash flow for banks.

It also noted that written-off loans are maintained off-balance sheet in line with international accounting practices and therefore should not be added to active loan portfolios when assessing the current health of the banking sector.

Bangladesh Bank warned that publishing unverified or technically inaccurate financial data could create misleading perceptions about the country's financial stability among domestic and international stakeholders, potentially affecting investor confidence and the broader economy.

The regulator urged media organisations to exercise greater caution when reporting on the financial sector and to verify data with official sources before publication.

The clarification comes amid increased public attention on the banking sector following the release of the Financial Stability Report 2025 and ongoing discussions over the scale of problem loans in the country's banks.

Bangladesh’s digital transactions grew 13 percent year-on-year in both volume and value in 2025, with the identical growth rate across both metrics pointing to a balanced and sustainable expansion of the country’s payment ecosystem.

According to Bangladesh Bank’s Payment Systems Report 2025, digital transaction volume rose from 482.7 crore in 2024 to 546.3 crore in 2025, while transaction value climbed from Tk 90.38 lakh crore to Tk 102.24 lakh crore over the same period.

The central bank said the symmetrical growth indicates that users are no longer confining digital payments to small transactions such as mobile recharges but are now using these channels for larger commitments, including utility bill payments, tuition fees, and high-value e-commerce purchases.

“Digital is no longer an experiment; it is a habit,” the report said.

BB said the 13 percent alignment between volume and value signals that digital infrastructure has become reliable enough to handle both frequency and magnitude – the hallmark of a mature transition in which digital rails are carrying not just more transactions but also greater economic weight.

Non-digital transactions recorded the sharpest growth in volume, rising 25 percent to 539.5 crore.

However, the value of transactions through these channels fell 7 percent year-on-year to Tk 209.48 lakh crore.

The report said the paradox resolves itself as people are transacting more often through non-digital channels but moving less money each time, with high-value settlements migrating to digital infrastructure.

Total transaction volume across both categories rose 19 percent to 1,085.9 crore, while total transaction value edged down 1 percent to Tk 311.72 lakh crore.

Spain wants to finance the implementation of development projects in various sectors of Bangladesh. To that end, the European country has proposed signing a protocol agreement to strengthen mutual cooperation in the economic and financial sectors.

Under the proposed agreement, Spain would provide commercial loans, technical assistance, feasibility studies and financing for similar activities in Bangladesh, modelled on frameworks used by the Organisation for Economic Co-operation and Development (OECD).

It has proposed that Spanish companies be allowed to participate in projects financed under its credit line.

It has also requested that Spanish goods and services be given preference in those projects.

Spain recently submitted the proposal to the government, which has responded positively. Following this, the Economic Relations Division (ERD) prepared a draft agreement. Opinions are now being sought from all ministries and divisions.

A finance ministry official, speaking on condition of anonymity, said Bangladesh already has similar agreements with China, India, Japan and South Korea. Although Türkiye has also proposed such an agreement; Bangladesh has yet to consent.

The official said the arrangement could open a new financing window for Bangladesh's development projects, especially as major development partners such as the World Bank, the Asian Development Bank (ADB) and the Japan International Cooperation Agency (Jica) have recently been proposing financing at commercial interest rates.

Sources said the framework protocol has been designed to support financing in transport infrastructure, renewable energy and other energy infrastructure, information and communications technology, cybersecurity in the telecommunications sector, water and solid waste management, agri-food industries, innovation, digitalisation, education and healthcare.

Spain would also be able to finance projects in any other sector if both countries agree. Particular emphasis would be placed on small and medium-sized enterprises and projects aimed at addressing the impacts of climate change.

The official said Bangladesh has substantial financing needs in these sectors, making the agreement beneficial for both countries. Bangladesh would gain easier access to funding for economic and social development, while Spanish companies would benefit from greater internationalisation.
Infograph: TBS
Infograph: TBS

He added that Spain first proposed a similar agreement to the then Awami League government in 2024. Discussions stalled after the change of government but have now resumed following the proposal's resubmission to the new administration.

The draft agreement also calls for the establishment of a bilateral working group, which would meet annually or at the request of either signatory. Experts from both countries would be able to participate in the meetings.

Under the agreement, loan proceeds could not be used by Bangladesh to pay customs duties, taxes or other levies on goods and services related to projects. The loans would be sovereign-guaranteed, with both parties remaining subject to their respective national laws.

Both countries would also reaffirm their commitment to combating corruption. In particular, no third party could be directly or indirectly involved in international transactions under the agreement. If evidence of corruption, misconduct or unlawful benefit is found, the Spanish government would have the authority to suspend financing, withdraw funding or demand early repayment of loans.

A former finance secretary said that while the tied-loan nature of the arrangement would create some dependence on Spanish products, it would also help Bangladesh strengthen its capabilities in areas such as advanced European technology and cybersecurity.

He, however, cautioned that Bangladesh would need to be careful during project selection and negotiations to ensure that interest rates and conditions do not place undue pressure on the country's macroeconomic stability.

According to data from the Export Promotion Bureau (EPB), Bangladesh exported goods worth $2.84 billion to Spain during the first nine months (July-March) of FY2025-26. Major exports included knitwear, woven garments, home textiles and leather products.

Meanwhile, Bangladesh Bank data show that Bangladeshi businesses and investors imported goods worth $147 million from Spain during FY2024-25. Major imports included capital machinery, olive oil, chemicals and industrial raw materials.

In one of its publications, the Dhaka Chamber of Commerce and Industry stated that Spanish public and private sector investments abroad amount to approximately $50 billion. Of that amount, only $8.35 million in foreign direct investment came to Bangladesh between 2001 and June 2024, a very small share of Spain's global investment outflows.

In 2021, a Bangladeshi delegation led by then railways minister Nurul Islam Sujan visited Spain at the invitation of the country's minister for transport, mobility and urban agenda. During the visit, Nurul Islam Sujan held a meeting with Spanish Transport Minister Raquel Sánchez Jiménez, who expressed interest in investing in Bangladesh Railways.

Bangladesh has taken a landmark step toward reshaping its trade landscape, with the Cabinet Committee on Economic Affairs (CCEA) approving the establishment of the country's first-ever Free Trade Zone (FTZ) in Anowara, Chattogram.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Finance Minister Amir Khosru Mahmud Chowdhury, today (17 June) approved such a milestone proposal to establish the country's first Free Trade Zone (FTZ) aimed at boosting trade, investment, and export capacity.

The government hopes the initiative will position Bangladesh as a key player in international trade, supply chain management, and regional logistics. Aimed at boosting trade, investment, and export capacity, the Bangladesh Economic Zones Authority (Beza) has been working for years toward establishing a modern free trade zone in line with international standards.

The establishment of Bangladesh's first Free Trade Zone is being regarded as a landmark step toward the country's economic transformation, enhanced global trade connectivity, and improved regional competitiveness. It is expected to position Bangladesh as a key trade and logistics hub in South and Southeast Asia, according to the press release issued by CCEA.

To that end, a high-level committee comprising ten relevant agencies including the Ministry of Commerce, Ministry of Industries, Finance Division, National Board of Revenue (NBR), and the Ministry of Shipping conducted a comprehensive review of FTZ management systems, laws, policies, incentive frameworks, and operational models from countries around the world, culminating in a detailed report, said the press release.

Based on the committee's recommendations, the Anwara area along the banks of the Karnaphuli river in Chattogram was selected as the most suitable location for the country's first FTZ, taking into account its infrastructure advantages, international trade connectivity, logistics capacity, and potential for future expansion.

The proposed FTZ is expected to open new horizons in international trade and supply chain management for Bangladesh. It is also anticipated to play a significant role in attracting foreign investment, diversifying exports, developing an international logistics hub, and generating employment.

Notably, the establishment of the FTZ had earlier received approval at the 9th meeting of Beza's Governing Board on January 26, 2026.

Reform of the necessary laws and policies is already underway as Beza is currently reviewing and updating a range of legislation, including the Bangladesh Economic Zones Authority Act 2010, Customs Act 2023, Warehouse Licensing Rules 2024, Import Policy Order 2021–2024, Export Policy Order 2024–2027, Foreign Exchange Management Guidelines, National Industrial Policy 2022, and the National Logistics Policy 2024, according to the press release.

Beza believes the FTZ will open new horizons in international trade and supply chain management for Bangladesh, while also attracting foreign investment, diversifying exports, developing an international logistics hub, and generating employment.

It also hoped that the establishment of Bangladesh's first FTZ would be a transformative milestone for the country's economic development, global trade integration, and regional competitiveness helping cement Bangladesh's position as a vital trade and logistics hub in South and Southeast Asia.

Bida and Beza Executive Chairman Ashik Chowdhury said Bangladesh is at the right moment to transition to a free trade zone model.

"The country's growing logistics capacity has created an opportunity to position Bangladesh as a regional warehouse and commercial hub," he said.

He added that exports are being treated as a primary driver of the economy, making the FTZ a natural next step. "This model has been successfully implemented in Dubai, China, and across Southeast Asia — Bangladesh wants to follow that path," he said.

Chowdhury also noted that some budget amendments and changes to the Import Policy Order have already been made in preparation for the FTZ, though further revisions to several laws and regulations remain necessary.

Bangladesh is planning to establish its first free trade zones (FTZs), with the government positioning the initiative as a transformative trade strategy that could slash export lead times, attract foreign suppliers and turn the country into a regional logistics hub.

The Cabinet Committee on Economic Affairs yesterday gave in-principle approval to the establishment of FTZs near the Matarbari deep-sea port in Cox’s Bazar and in Anwara, near Chattogram Port, Cabinet Secretary Md Nasimul Gani said.

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According to officials familiar with the matter, the zones will cover around 600 acres. Development of the Anwara zone is expected to begin this year. The Matarbari FTZ is slated for 2030–2033, alongside expansion of the deep-sea port.

Gani said the FTZs are expected to facilitate trade, logistics and manufacturing, attract investment and strengthen Bangladesh’s position as a regional trade hub. He added that the initiative was part of a long-term policy effort.

“This is the most successful (trade zone) model yet,” said Ashik Chowdhury, executive chairman of the Bangladesh Investment Development Authority (Bida). “Nearly 37 percent of Dubai’s trade comes from FTZs. Given our country’s geopolitical position, it has become critical for us.”

Unlike conventional economic zones or export processing zones (EPZs), the proposed FTZs will allow both local and foreign investors to engage in a broader range of trading, logistics and manufacturing activities.

Chowdhury described the FTZ as an “EPZ++” -- a more advanced evolution of the EPZ model introduced in the 1980s. “Global trade has evolved a lot since then. Under the current global trade structure, FTZs give you a very different proposition,” he said, adding that EPZs would continue to operate alongside the new zones.

The core proposition of the FTZ model is that the zones will function outside Bangladesh’s customs territory. Investors can import raw materials and machinery duty-free, undertake value addition and re-export finished goods. Products may also enter the domestic market upon payment of applicable duties.

“You have to think of it as not part of Bangladesh. It is an overseas system,” Chowdhury said.

Warehousing is expected to be the primary revenue driver. Foreign suppliers will be able to stock raw materials inside the zones and supply both Bangladeshi exporters and buyers across the region on demand. Under the current system, importers pay duties upfront and seek refunds later, a process long criticised as cumbersome.

“If we have raw materials in a warehouse near to us, it will reduce lead times for our exports,” Chowdhury said. “We can also start tapping exporters from neighbouring countries. The ambition is that big suppliers can use our zones as a secondary location to supply materials across the region.”

The model follows the blueprint of globally successful hubs including Dubai’s Jebel Ali Free Zone, and mirrors systems already in place in Vietnam and Thailand -- countries Chowdhury acknowledged as competitors Bangladesh has been slow to match. “We are a bit late on this,” he said.

The initiative follows recommendations by a Bangladesh Economic Zones Authority (Beza) committee that reviewed international FTZ models. Officials expect the zones to attract light manufacturing, logistics operators, warehousing businesses, regional distribution centres and multinational firms seeking supply-chain bases in South Asia.

Moinul Islam, former economics professor at the University of Chittagong, said the proposal had been under discussion for over two decades. “The FTZs would not only attract fresh investment but also create a platform where suppliers and agents of industrial raw materials could stock and trade their products closer to export-oriented manufacturers.”

Economists view the Matarbari FTZ as potentially the more transformative of the two. As Bangladesh’s first deep-sea port capable of handling large-draft vessels, Matarbari is expected to cut shipping costs, shorten transit times and improve connectivity with global shipping routes.

“These are exactly the factors multinational investors consider when selecting production and distribution locations,” said M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh.

He added that the Anwara site’s proximity to Chattogram port, the Karnaphuli Tunnel, Shah Amanat International Airport and three existing EPZs made it an equally strong draw for foreign investors.

Business leaders have also welcomed the move as an opportunity to diversify investment beyond garments.

Mohammed Amirul Haque, president of the Chittagong Chamber of Commerce and Industry, said the zones could attract electronics, light engineering, consumer goods, packaging and regional distribution operations.

However, he cautioned that infrastructure must keep pace, calling for an urgent upgrade of the Dhaka-Chattogram highway from four to ten lanes.

Bida’s Chowdhury said the government was working to amend seven provisions of law and regulation to operationalise the zones. “We will try to start one of the zones by next year. It will depend on how fast we can change the laws.”

Public investment and policy support for the agriculture sector have increased over the years, but the benefits of budgetary allocations have yet to adequately reach smallholder and marginal farmers, experts said today.

At a discussion, experts discussed how proposed budget allocations, policy priorities, and strategic interventions for fiscal year 2026-27 can be translated into tangible benefits for farmers and contribute to the long-term transformation of the agriculture sector..

The observations came at a roundtable, titled "National Budget FY2026-27: Strategic Discussion on Crop Agriculture", jointly organised by LightCastle Partners and the Sustainable Agriculture Foundation (SAF) Bangladesh, at a hotel in Dhaka.

Bangladesh's crop agriculture sector remains crucial for ensuring food security, supporting rural livelihoods, driving agro-industrial growth, and generating export earnings. Between 1999 and 2019, the value of agricultural production grew at an average annual rate of 3.54 percent.

However, the sector continues to grapple with climate vulnerability, increasing dependence on agricultural inputs, and inefficiencies in post-harvest management.

Farmers continue to face mounting challenges, including rising input costs, post-harvest losses, climate-related risks, limited market access, and weak implementation of development programmes, the experts said.

Agriculture's contribution to Bangladesh's gross domestic product (GDP) has declined from nearly 38 percent in the 1970s to 11.2 percent at present.

At today's event, Zeeshan Abedin, social research and impact adviser at LightCastle Partners, presented a keynote analysis of the proposed agriculture budget.

According to the presentation, the proposed FY2026-27 budget allocates Tk 28,881 crore to the Ministry of Agriculture, including Tk 7,946 crore for development expenditure, up from Tk 27,224 crore in the original FY2025-26 budget.

The budget also proposes Tk 17,001 crore for agricultural subsidies, including fertiliser support and related activities.

The presentation highlighted that agriculture's allocation under the development budget has doubled to Tk 7,945 crore. However, the proposed subsidy allocation has declined by 1.4 percent, while support for industry players has shifted towards input tax reductions.

A notable feature of the proposed FY2026-27 budget is its greater emphasis on water management and irrigation, post-harvest management, and agricultural assistance through the Farmer Card programme.

However, concerns were raised over the utilisation of allocated funds. While Annual Development Programme (ADP) implementation reached 93 percent in FY2022-23 and 95 percent in FY2023-24, the rates fell to 60 percent in FY2024-25 and 62 percent in FY2025-26.

MA Sattar Mandal, emeritus professor at Bangladesh Agricultural University in Mymensingh and professorial fellow at the Bangladesh Institute of Development Studies, moderated the session.

Zahedul Amin, co-founder and managing director of LightCastle Partners; Md Farhad Zamil, executive director of SAF Bangladesh; Anwar Faruque, board director of Bangladesh Krishi Bank and former secretary of the Ministry of Agriculture; and Md Habibullah, director of the Administration and Finance Wing of the Department of Agricultural Extension, also spoke at the event.
FARMERS

Foreign Minister Khalilur Rahman today (17 June) said the reciprocal tariff agreement with the United States will help attract foreign investment, strengthen energy security, and further reinforce Bangladesh's position in global supply chains.

He told parliament this while responding to a question from Gazipur-5 MP AKM Fazlul Haque Milon, who asked whether diplomatic efforts had been intensified to attract new export markets and international investment.

In his reply, the foreign minister highlighted various trade agreements with different countries, expanded business engagement initiatives, and the organisation of international business conferences as part of the government's efforts.

Khalilur Rahman said through the recently signed Agreement on Reciprocal Trade (ART) with the United States, Bangladesh had secured duty-free access for ready-made garments produced using American cotton.

He expressed hope that the agreement would play a positive role in attracting foreign investment, strengthening energy security, and enhancing Bangladesh's position within global supply chains.

The then interim government signed the agreement with the United States on 9 February, three days before the national parliamentary election.

According to business leaders and experts, the agreement creates obligations for Bangladesh to import various products from the United States, including cotton, energy products, soybeans, wheat and aircraft.

Diversification key to Bangladesh's foreign policy

Meanwhile, responding to another question from Netrakona-3 MP Rafiqul Islam Hilaly today, Khalilur Rahman told parliament that Bangladesh's foreign policy prioritises the diversification of diplomatic relations and the maintenance of strategic balance.

He said Bangladesh is strengthening ties with traditional partners such as the US, EU, UK, Japan, South Korea, China, Middle Eastern countries, Canada and Australia, while expanding cooperation with emerging economies in Asean, East and Central Asia, Africa and Latin America.

He said global shifts, including conflicts, trade realignment, energy and food security concerns, technological competition, climate change and migration, are reshaping international relations, requiring a flexible and interest-driven foreign policy.

The minister emphasized Bangladesh's approach is guided by mutual respect, sovereignty, non-interference and cooperation, aligned with national interest and the "Bangladesh First" vision.

On regional relations, he said Bangladesh is pursuing constructive engagement with India on unresolved issues such as water sharing, border management, connectivity, energy cooperation and trade barriers. Efforts are also ongoing with Myanmar, particularly on resolving the Rohingya crisis.

The minister added that Bangladesh is working to revitalise Saarc and strengthen Bimstec to enhance regional cooperation.

The government is also expanding partnerships in emerging sectors including AI, digital economy, semiconductors, renewable energy, R&D and the blue economy, while identifying new export markets in the Middle East, Africa, East and Central Asia and Latin America, Khalilur said.

"Labour market diversification is also a priority, with efforts to expand skilled worker migration beyond traditional Middle Eastern and European destinations to Japan, South Korea, South America and Eastern Europe," he added.

An entrepot is poised to emerge along the coast of the Bay of Bengal for duty-free trading by foreign and local entrepreneurs as the government approves building two free-trade zones near Chittagong seaport and beside Matarbari deep-sea port.

An entrepot is a trading centre, port, or warehouse where goods are imported, stored, and then re-exported to other countries. These goods are typically exempt from import and export duties.

Such trade zoning, which exists in some other countries, is first of its kind in Bangladesh, officials said after the approval given Wednesday in principle.Regional business directory

The approval was given by the Cabinet Committee on Economic Affairs (CCEA) in a meeting chaired by Finance and Planning Minister Amir Khosru Mahmud Chowdhury at Bangladesh Secretariat in the capital.

Briefing newsmen after the meeting, Cabinet Secretary Nasimul Ghani said the setting up of the free-trade zones still remained at concept stage but got the approval at the meeting. "Detailed plan, investment structure, and management method of the zones will be finalised later."

He informs that each free-trade zone will be established in 300 acres of land aiming to boost the country's economy, expand international trade, attract foreign investment, and increase port-based economic activities.

Mr Ghani notes that in the free-trade zones many customs and tax-related rules and regulations remain relaxed or absent in conducting international commercial activities where both foreign and local traders and investors can conduct business easily.

He also says ships coming from abroad will have the opportunity to unload, sell or re-export goods in these areas. At the same time, Bangladeshi entrepreneurs will also be able to easily supply products to the international market from here.Personal finance e-book

According to him, the setting up of such a zone will significantly increase the overall economic activity of the country.

The government hopes the volume of economic activity will increase, country's gross domestic product (GDP) will see a positive impact, port utilisation and shipping traffic will increase, and rapid transfer of goods and services will be possible once the free-trade zones are established.

Mr Ghani mentions that such free-trade zones are being operated in different countries, including the United Arab Emirates. "Though Dubai has limited natural resources, huge investments have come there due to the free economic zone and commercial facilities and it has developed into one of the centres of international trade. Bangladesh is also trying to create such an environment."

Both domestic and foreign investors will be able to invest in the free-trade zones. Manufacturing-oriented industries, warehousing, logistics, commercial services, and even tourism-based activities can be developed there.

Also, the cabinet committee approved in principle the formation of a special-purpose company and related development and land-lease agreements to establish a Chinese Economic and Industrial Zone (CEIZ) in Anwara Upazila of Chittagong.

This initiative will play an important role in further strengthening economic and trade relations between Bangladesh and China. "Establishment of an integrated Chinese industrial zone will make it easier for Chinese investors to invest in Bangladesh," the official says about the government view.Global economy podcast

However, he says, the amount of investment, infrastructure development and project- implementation schedule have not yet been determined.

Also, the meeting approved in principle import of urea fertiliser from Russia under direct- purchase method.

The Appellate Division's Chamber Court has stayed a High Court order that had blocked the conversion or liquidation of closed-end mutual funds, effectively clearing the legal path for the process to move forward.

With the stay now in place, trustees of the affected funds may proceed with conversion or liquidation activities, according to lawyers involved in the matter.

The order was issued today (17 June) by Justice Farah Mahbub's Chamber Court on an application filed by the Bangladesh Securities and Exchange Commission (BSEC). The court has also scheduled a hearing for June 22, when the appeal will be taken up before the full Appellate Division bench under the Chief Justice.

Meanwhile, a lawyer representing Bangladesh RACE Asset Management told The Business Standard that the company had also filed a writ petition on the issue. The matter is also scheduled to be heard on 22 June. Although it was listed for hearing today, no proceedings took place.

On 9 June, BSEC issued a fresh directive instructing trustees to move forward with the conversion or liquidation process. The order placed trustees in a difficult position, caught between the regulator's directive and the High Court's status quo order.

Later, on 11 June, the commission issued another letter directing trustees to continue the process excluding the interests of unit holders who had filed the writ petitions. However, the existing court order continued to create uncertainty among trustees.

Many feared that complying with BSEC's directive could be interpreted as a violation of the court order. As a result, the Investment Corporation of Bangladesh (ICB) sought clarification from the regulator and decided not to take any action until the legal uncertainty was resolved.

Following Wednesday's Chamber Court order, BSEC Executive Director and spokesperson Abul Kalam told TBS, "Some unit holders had obtained a status quo order from the court regarding the conversion or liquidation of closed-end mutual funds. BSEC has now secured a stay on that order. Therefore, there is no longer any obstacle for trustees to proceed with the conversion or liquidation process."

In May 2026, BSEC introduced a regulation requiring any closed-end mutual fund trading at a discount of 25% or more to its Net Asset Value (NAV) to either convert into an open-end fund or undergo liquidation.

As part of the initiative, the commission instructed trustees on 7 May to begin preparations for conversion or liquidation from 12 May onward. However, unit holder Rashidul Islam challenged the directive in the High Court, arguing that BSEC lacked the authority to alter the tenure of existing funds.

On 24 May, the High Court issued a two-month status quo order and asked the finance secretary, BSEC chairman, managing directors of the stock exchanges, ICB and other respondents to explain why the directive should not be declared unlawful.

The court also questioned whether BSEC had the authority to compel the conversion or liquidation of funds whose tenures had previously been extended through a 2018 government notification.

Currently, 22 of the 36 listed closed-end mutual funds are trading at discounts of 25% or more to their NAV, making them subject to the new regulation.

Under BSEC's proposed framework, conversion or liquidation requires approval from at least 75% of unit holders

The central bank yesterday issued a clarification saying that non-performing loans (NPLs) in the banking sector stood at 30.60 percent at the end of last year.

The Bangladesh Bank (BB) statement came after several media outlets reported that distressed loans in the banking sector ranged between 45 percent and 60 percent at the end of 2025. Those reports were based on the Financial Stability Report 2025 recently published by the BB.

The central bank said media outlets had made their “own calculations” in arriving at those higher figures.

It added that there is no universally accepted definition of distressed loans among international banking policy-making organisations.

According to the BB, loans that do not generate income or where borrowers fail to pay instalments are generally treated as distressed. However, it said rescheduled loans that remain unclassified should not be included in that category, as borrowers continue to make repayments under revised terms.

The central bank also said written-off loans should not be counted as distressed loans, as they are no longer part of a bank’s balance sheet under international best practice.

The BB said that, based on its definition, NPLs in the banking sector stood at 30.60 percent as of 2025.

It mentioned that including rescheduled loans, written-off loans and other categories alongside classified loans could create a misleading picture of the banking sector. Such reporting could send an incorrect message both at home and abroad.

It urged media outlets to report on the issue responsibly, with due regard to objectivity, sensitivity and national interest.

Britain’s annual inflation rate was unchanged at 2.8 percent in May as higher petrol prices caused by the US-Iran war were offset by lower food costs, official data showed Wednesday.

The Consumer Prices Index level matched April’s reading, the Office for National Statistics (ONS) said, while an analysts’ consensus forecast had been for an increase to 3.0 percent.

“While the war in the Middle East pushes prices up globally, we have got the right economic plan and inflation has held steady,” finance minister Rachel Reeves said in response.

Even though the United States and Iran agreed this week to a deal to end the conflict, inflation could still rise in the coming months with energy costs remaining above pre-war levels.

The better-than-expected inflation data for May could meanwhile prove fruitless for the Labour government, which is facing a special vote Thursday expected to set in motion an attempt to oust Keir Starmer as prime minister.

Longtime Starmer critic Andy Burnham is hoping to win an election for a parliament seat in northwest England so that he can run for the Labour leadership, and the premiership.

The inflation data also comes before an interest rate decision by the Bank of England, which is expected to hold borrowing costs steady Thursday after energy prices tumbled in recent days thanks to the US-Iran deal.

The dollar held steady against most major peers on Wednesday ahead of the Federal Reserve’s first policy decision under chair Kevin Warsh, which could see some volatility as investors adjust to a new style of policy making and communication. The euro was flat on the day at $1.1605, while the pound softened a fraction on both the dollar, to $1.3420, and the euro, to 86.5 pence to the common currency, after cooler-than-expected UK inflation data that could give the Bank of England cover to hold off on raising rates this year.

But the big event of the day, the Fed meeting, is still to come, and left investors hesitant to take on large positions. The Fed is widely expected to stand pat at Warsh’s debut meeting. The statement, economic projections and news conference, however, will be scrutinised for any signals of the Fed dropping its easing bias as officials grow more hawkish on inflation risks.

“There have been many central banks meeting this month, but this is the one that’s overshadowing everything,” said Jane Foley, head of FX strategy at Rabobank. “There is a lot of uncertainty over what Warsh might signal. No one is expecting a change in interest rates, but is he going to try and downplay the dot plot? Try and set up a new framework? Try to steer them towards an easing bias?” she said.

The so-called “dot plot” shows policymakers’ expectations for the future path of interest rates. Warsh was appointed by US President Donald Trump, who repeatedly criticised the previous Fed chair, Jerome Powell, for being slow to cut rates. Money market pricing actually reflects around an 80 percent chance of the Fed hiking rates this year.

Before the US and Iran reached an interim agreement to end the war in the Middle East, economists had thought the Fed would signal some willingness to raise rates to try to limit the extent to which elevated energy costs spill over into broader inflation. Now though, oil is back below $80 a barrel and the Fed may give different signals.

Bangladesh is set to introduce free trade zones (FTZs) for the first time under a proposed customs framework, marking a major shift in its export strategy, industrial development and investment facilitation efforts.

Under the proposed framework, businesses will be allowed to import raw materials, components and goods into designated FTZs without paying duties. Companies will be able to store, process, assemble, repackage, relabel and re-export products from these zones. Goods may also be supplied to the domestic market after payment of applicable duties and taxes.

The initiative is expected to help reduce supply chain delays, lower production costs and strengthen Bangladesh's position as a regional trade and logistics hub as the country prepares for graduation from least developed country (LDC) status.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Finance Minister Amir Khosru Mahmud Chowdhury, yesterday approved a proposal to establish the country's first free trade zone in Anwara, Chattogram, aimed at boosting trade, investment, and export capacity.

Industry leaders say the move could address one of the biggest challenges facing Bangladesh's manufacturing sector: long lead times in sourcing imported inputs.

Currently, export-oriented manufacturers often require 20 to 30 days to receive imported raw materials due to procedures involving letters of credit, shipping, customs clearance, and inland transportation.

Businesses believe FTZs will allow companies to maintain inventories closer to production facilities, enabling manufacturers to access imported inputs quickly when export orders arrive.

MA Jabbar, managing director of DBL Group and President of Bangladesh Economic Zone Investor Association, said the introduction of FTZs would mark a major shift in Bangladesh's trade and investment landscape.

"Bangladesh's export basket is still highly concentrated. Free trade zones can create opportunities for new sectors to integrate into global supply chains and help generate momentum beyond the RMG industry. This initiative can play a significant role in attracting new investment and diversifying our export base," he said.

SMEs likely to be major beneficiaries

Small and medium enterprises (SMEs) are expected to gain significantly from the proposed system as many currently struggle to import raw materials due to limited access to trade finance, import facilities, and economies of scale.

Under the FTZ model, large operators could import materials in bulk and store them in designated zones, while smaller manufacturers would be able to purchase supplies according to their requirements.

Taskin Ahmed, president of the Dhaka Chamber of Commerce and Industry, said reducing lead time is one of the biggest priorities for Bangladesh's industrial sector.

"Even large manufacturers face losses because of delays in opening LCs and transporting goods. SMEs are even more disadvantaged as many cannot directly import raw materials," he said.

He added that global buyers are increasingly demanding faster delivery, and Bangladesh often loses business opportunities to competing countries because manufacturers cannot arrange inputs quickly enough.

"An FTZ system can substantially reduce that disadvantage," he said.

Anwara in Chattogram to host first FTZ

The Bangladesh Economic Zones Authority (Beza) has been working towards establishing a modern free trade zone in Chatogram's Anwara, in line with international standards.

The establishment of Bangladesh's first Free Trade Zone is being regarded as a landmark step towards the country's economic transformation, enhanced global trade connectivity, and improved regional competitiveness. It is expected to position Bangladesh as a key trade and logistics hub in South and Southeast Asia, said the press release issued by the Cabinet Committee on Economic Affairs.

To that end, a high-level committee comprising 10 relevant agencies including the commerce, industries, and shipping ministries, Finance Division, and National Board of Revenue (NBR), conducted a comprehensive review of FTZ management systems, laws, policies, incentive frameworks, and operational models from countries around the world, culminating in a detailed report.

Based on the committee's recommendations, the Anwara area along the banks of the Karnaphuli river in Chattogram was selected as the most suitable location for the country's first FTZ, taking into account its infrastructure advantages, international trade connectivity, logistics capacity, and potential for future expansion.

Learning from global models

FTZs and free trade warehousing zones have become important tools for trade facilitation and investment attraction in several economies, including the Shanghai Free Trade Zone, India's Free Trade Warehousing Zone (FTWZ) model, the industrial and trade zones of Vietnam, the Jebel Ali Free Zone in the UAE and Singapore's globally recognised trade hub model.

Experts believe Bangladesh could use a similar model to attract investment in sectors beyond garments, including electronics, automotive components, medical devices, agro-processing and light engineering.

"This is a transformative initiative," said Snehasish Barua, director of SMAC Advisory Services and partner at Snehasish Mahmud & Co.

"Currently, companies often wait weeks to receive imported raw materials. FTZs will allow manufacturers to source inputs much faster," he said.

He added that larger companies could import materials in bulk and distribute them among smaller businesses, reducing procurement and logistics costs.

However, Snehasish warned that effective monitoring would be critical.

"If duty-free goods enter the domestic market without proper controls, local industries could face unfair competition," he said.

More than a warehouse system

NBR officials insist that the initiative should not be viewed merely as another warehousing arrangement.

"Bangladesh already has a bonded warehouse system, but it primarily serves specific export-oriented industries," a senior NBR official told TBS on condition of anonymity.

"Free trade zones will be a broader and more modern customs framework that can accommodate a wider range of businesses," he added.

According to the official, the initiative presents an opportunity to position Bangladesh as a regional trade and logistics hub.

To prevent misuse, the government is planning to introduce digital tracking systems, inventory monitoring and regular customs audits.

NBR officials said the FTZ concept should not be viewed simply as an extension of the existing bonded warehouse system.

Economists believe FTZs could help diversify exports, improve manufacturing competitiveness and attract both domestic and foreign investment.

"Logistics inefficiencies and complicated import-export procedures account for a significant share of business costs in Bangladesh," said Dr Masrur Reaz, chairman of Policy Exchange Bangladesh.

"If managed properly, free trade zones can play an important role in reducing those costs," he said.

He added that port efficiency, customs automation, transport infrastructure and policy stability must improve alongside the FTZ initiative.

Steel manufacturers today urged the government to withdraw proposed hikes in value-added tax (VAT) and duties in the national budget for 2026-27, warning that the measures could increase costs by up to Tk 12,000 per tonne as most mills operate below half their capacity.

At a press conference at the National Press Club, Bangladesh Steel Manufacturers Association (BSMA) President Mohammed Jahangir Alam said the industry was already struggling with rising electricity tariffs, port charges, river dues, transportation expenses, and other operating costs.

The recent hike in electricity prices alone has increased production costs by Tk 1,800-2,000 per tonne, while higher logistics and operational expenses have added another Tk 3,000-3,500 per tonne, he said.

The proposed budget measures—including higher VAT at the sales stage, increased VAT on locally sourced scrap, and additional duties on ferro-alloys, refractory materials, and spare parts—would add a further Tk 2,000-2,500 per tonne to production costs.

"As a result, direct production costs could increase by Tk 5,000-6,000 per tonne," Alam said.

Weak demand has compounded the pressure on manufacturers. According to the BSMA, most steel mills are operating at less than 50 percent of their installed capacity, pushing up overhead, financing, and other fixed costs.

This has created an additional indirect cost burden of Tk 5,000-6,000 per tonne, bringing the combined impact of higher taxes and underutilised capacity to Tk 11,000-12,000 per tonne.

Bangladesh's annual steel demand stands at around 5 million tonnes, while the industry's installed production capacity exceeds 10 million tonnes, leaving many producers with significant idle capacity, Alam said.

He welcomed several business-friendly provisions in the proposed budget, including the repeal of certain minimum tax provisions, lower advance tax requirements for appeals and references, a reduction in withholding tax on interest payments for foreign loans from 20 percent to 10 percent, and a cut in tax deducted at source on electricity bills.

However, he said those benefits would be outweighed by the proposed increases in taxes and duties on steel-related inputs.

The BSMA president argued that increasing industrial output and accelerating the implementation of public infrastructure projects would be a more effective way to boost government revenue than imposing additional taxes on industries facing subdued demand.

He said faster execution of roads, bridges, flyovers, railways, ports, airports, economic zones, housing projects, and power plants would stimulate steel consumption and help manufacturers utilise more of their installed capacity.

BSMA Secretary General Sumon Chowdhury said industries need policy support to expand production and create jobs.

"If factories operate at only 50 percent capacity, government revenue will not increase," he said, adding that higher industrial output would generate more revenue even with a lower tax burden.

He also warned that weak industrial growth could limit employment opportunities for the growing number of graduates entering the job market each year.

The association urged the government to withdraw the proposed additional VAT, duties, and taxes on steel-related inputs; retain the existing VAT structure on local scrap and sales; restore the turnover tax rate to 0.6 percent from the proposed 1 percent; and speed up the implementation of development projects.

Economists and researchers have said the proposed FY 2026-27 budget highlights a significant mismatch between the current fiscal year's economic reality, the government's ambitious targets, and the country's limited implementation capacity.

They said projected targets for GDP growth, inflation control, revenue collection, foreign investment and budget deficit management are not fully aligned with present economic conditions.

The observations were shared at a national seminar titled "Proposed National Budget: From the Perspective of Development and Political Economy," held in the city today (17 June), organised by the Economic Reporters Forum (ERF). One Initiative Research and Development (OIRD) organised the seminar.

Economist and Associate Professor Zubair Ahmed of the Bangladesh Institute of Governance and Management (BIGM) presented the keynote paper.

He noted that although GDP growth stood at 4.14% in the current fiscal year, the upcoming budget has set a 6.5% target, which he described as overly ambitious and misaligned with prevailing economic reality.

He also pointed out structural constraints, saying export earnings remain 82% dependent on the ready-made garment sector, making diversification difficult. While foreign direct investment (FDI) is typically around 0.4–0.5% of GDP, the budget target has been set at 2.7%, which he termed unrealistic.

He further said the attempt to raise growth to 6.5% while reducing inflation from 8–10% to 7.5% appears contradictory. He warned that allocating Tk40,000 crore to the banking sector and increasing social safety net spending could add further pressure on the market.

Despite long-standing gaps between National Board of Revenue (NBR) targets and actual collection, he said the new revenue targets also appear unrealistic.

Zubair Ahmed added that although allocations in some sectors of the Annual Development Programme (ADP) have been reduced, spending has increased in education, health and agriculture. He stressed aligning revenue targets with NBR capacity, ensuring sectoral balance, and strengthening oversight of public expenditure for stability.

Professor A K M Waresul Karim, Dean of the School of Business and Economics at North South University, said Bangladesh's budget has expanded more than 120 times over time but does not always reflect the country's actual economic capacity.

He said a larger budget does not necessarily mean a better one, as it increases pressure on borrowing, taxation and money supply to finance deficits. He also said a significant share of the budget is spent on administrative costs, limiting the effectiveness of social protection and development spending.

He further said combined direct and indirect taxes impose a tax burden of around 45–60% on the public, which may negatively affect investment and employment.

Mohammad Mizanur Rahman, executive director of the Centre for Strategic and Peace Studies, said Tk40,000-42,000 crore has been allocated to the defence sector, much of which is spent on salaries, allowances and administrative expenses, leaving limited scope for modern equipment procurement and creating capacity gaps.

He also expressed concern over agriculture, noting that only 5-6% of the national budget is allocated to the sector. He alleged that a large portion of agricultural subsidies goes to intermediaries rather than farmers.

Criticising the increase in the personal income tax exemption limit, he said inflation-adjusted relief for the public would remain limited, while changes in the tax structure could increase pressure on taxpayers.

Chapainawabganj-3 MP Md Nurul Islam Bulbul said the large budget deficit will increase reliance on borrowing, posing risks to the economy. He said achieving targets for revenue collection, inflation control, growth and investment would be difficult, citing weaknesses in the banking sector, absence of a clear employment plan.

AB Party General Secretary Barrister Mohammad Asaduzzaman Bhuiyan said budget implementation and accountability are more important than its size. He alleged that the lack of transparent evaluation of implementation creates scope for corruption and waste.

The SME Foundation has signed agreements with three banks to disburse more than Tk45 crore in loans to micro, small and medium enterprises (MSMEs) under its Credit Wholesaling Programme.

The loans, to be provided from the foundation's revolving fund, will carry an interest rate of 8% in line with a new directive from the Finance Division.

In a separate initiative aimed at helping returnee migrant workers become entrepreneurs, loans will be distributed through Karmasangsthan Bank with support from the Bangladesh office of the International Labour Organization (ILO). These loans will carry an interest rate of 7%.

Entrepreneurs will be eligible for loans ranging from Tk1 lakh to Tk25 lakh. However, entrepreneurs in cottage, micro, small and medium enterprises engaged in agro-based industries and food processing will be able to access loans of up to Tk1 crore at a 9% interest rate.

The agreements were signed on Tuesday night at a hotel in the capital between the SME Foundation and its partner institutions – Mutual Trust Bank, Dhaka Bank and Karmasangsthan Bank.

The signing ceremony was chaired by Industries Secretary Abdoon Naser Khan, while Industries, Commerce, Textiles and Jute Adviser Khandaker Abdul Muqtadir attended as the chief guest.

Speaking at the event, Muqtadir said the initiative would create a sustainable pathway for transforming remittances into entrepreneurship, entrepreneurship into investment and investment into employment.

Under the programme guidelines, partner banks will be encouraged to provide collateral-free loans, with no collateral required for loans of up to Tk10 lakh. Borrowers will have up to four years to repay their loans, including a grace period of up to six months, subject to their relationship with the lending bank

Bangladesh Bank (BB) on Wednesday clarified its position on the banking sector’s non-performing loans (NPLs), rejecting media reports that claimed the country’s distressed loan ratio ranged between 45 percent and 60 percent.Bangladesh economic report

The central bank said such figures were based on technically flawed calculations and did not reflect the actual condition of the banking sector as presented in its annual Financial Stability Report (FSR) 2025, reports BSS.

According to the report, the official NPL ratio of the country’s banking sector stood at 10.10 percent as of December 31, 2025.

Bangladesh Bank said this audited and finalized figure remains the authoritative measure of the sector’s non-performing assets.

The central bank noted that some media reports had calculated so-called distressed loans by adding together classified or non-performing loans, rescheduled loans and written-off loans.

It described this method as an inappropriate and technically incorrect approach that led to inflated figures.

Bangladesh Bank further stated that there is no internationally recognized or standardized definition of “distressed loans” among global regulatory and policy-making institutions.

While the term is often used to describe loans that are not generating income or are not being serviced regularly, the aggregate calculation used in the reports does not conform to accepted regulatory or accounting practices.Personal finance e-book

Explaining its position, the central bank said rescheduled loans cannot be considered distressed because borrowers continue to make repayments under approved restructuring arrangements.

These loans remain active assets that generate cash flow for banks.

It also noted that written-off loans are maintained off-balance sheet in line with international practices and therefore cannot be added to active loan portfolios when assessing the current condition of the banking sector.

Bangladesh Bank warned that publication of unverified and technically inaccurate financial data could create negative perceptions about the country’s financial stability among domestic and international stakeholders, potentially affecting confidence in the economy.

The central bank urged media organisations to exercise greater caution in reporting financial sector data and to verify information with official sources to ensure accuracy and maintain public and investor confidence.

The Dhaka Stock Exchange (DSE) on Wednesday issued FIX (Financial Information Exchange) certification to three more brokerage houses, bringing them closer to launching their own Order Management Systems (OMS) through API connectivity with the exchange's Nasdaq matching engine.Personal finance e-book

The certificates were handed over at a ceremony by DSE Chief Financial Officer Md Abid Hossain Khan to representatives of GMF Securities Limited, Prime Islami Securities Limited, and Unicap Securities Limited.

Head of IT at GMF Securities Lubna Mahmud, CEO of Prime Islami Securities Md Rajib Hasan and Unicap Securities CEO Waliul Islam received the certificates on behalf of their organisations.

DSE Deputy General Manager Jisan Bin Mubarak and Assistant General Manager Kamrun Nahar, along with other senior officials, were present at the event.

With the latest batch, DSE has now certified a total of 61 brokerage houses under the FIX protocol. Of these, 53 have already gone live with their own OMS platforms, conducting trading operations via API integration with the exchange.

DSE had initiated the API-based Broker House Order Management System (BHOMS) programme in 2020. Following that, 85 brokerage houses applied to DSE seeking API connectivity with the Nasdaq matching engine to operate their proprietary order management systems.

Oil inventories held by OECD member countries fell in May to their lowest level since 1990 as governments drew down stocks to offset the blockage of Gulf crude shipments during the Middle East war, the International Energy Agency said Wednesday.

The drawdown since the start of the conflict has reached 163 million barrels in the Organisation for Economic Cooperation and Development club of wealthy countries, the IEA said in its monthly report.
“Despite the significant reductions in demand for crude oil and refined products, the buffers in the system continue to erode at a record pace,” the agency said.

To ease the burden from soaring oil prices due to Tehran’s effective closure of the Strait of Hormuz, the IEA organised coordinated stock releases of 400 million barrels to the global market, of which 252 million have been released as of June 12.

“The flow of emergency stocks is expected to decelerate somewhat in June and July,” the agency said, after a deal was announced this week to end the war that began on February 28 with US and Israeli strikes on Iran.

But the impact of high prices will weigh heavily on demand through this year, with an expected decline of 1.1 million barrels a day compared to 2025 levels.

“We see growth rebounding to 2 mb/d in 2027, as a normalisation of trade flows, lower oil prices and an improving economic outlook contribute to the recovery,” the IEA said.