A new well at the Titas Gas Field in Brahmanbaria has started supplying 12.5 million cubic feet (mmcfd) of gas per day to the national grid, offering a modest boost to domestic production amid an ongoing supply shortage.

Bangladesh Gas Fields Company Limited (BGFCL) began supplying gas from the Titas-28 well following its formal inauguration today (19 September) by State Minister for Power, Energy and Mineral Resources Aninda Islam Amit.

Speaking at the inauguration, the state minister said the addition of 12.5mmcfd from the well was encouraging at a time when the country was facing an energy crisis.

"We have taken an initiative to drill 150 wells by 2030 to become self-sufficient in energy. Drilling of 27 wells is already underway. Titas-28 is one of them," he said.

He said three more wells are planned at the Titas field. If drilling is successful, they are expected to add another 45mmcfd of gas to the national grid.

The state minister said the government is working to increase domestic gas production as imported LNG has become increasingly expensive.

"We are buying LNG at two to three times the price we used to pay. We do not have the capacity to bear this cost," he said.

He also said domestic gas companies had remained neglected for around one and a half decades, limiting their ability to contribute to the country's energy supply.

"We have now created opportunities for these institutions to work. That is why they are being able to demonstrate their capabilities," Amit said.

The government is also working to strengthen state-owned Bangladesh Petroleum Exploration and Production Company Limited (Bapex) to increase domestic gas production, he said. Two drilling rigs are currently being procured, while another is also planned.

Local officials are also being trained so they can undertake exploration and drilling activities based on their skills and competence, he said.

Abdul Jalil Pramanik, managing director of BGFCL, said increasing local gas production is a priority as the country faces a major gas supply problem.

"Titas-28 is one of our initiatives to increase domestic gas supply. It is a shallow well. Our target is to increase gas supply through drilling deeper wells," he said.

He said drilling of the Titas-31 well is currently underway and described it as the country's deepest well drilling project.

The Dhaka Stock Exchange (DSE) extended its recovery for a third consecutive session today (17 September), with the benchmark DSEX rising above the 5,500-point mark amid broad-based buying across major sectors.

Investors remained active despite ongoing geopolitical tensions in the Gulf region, while assurances of improved gas supplies to industrial hubs appeared to boost market sentiment.

The DSEX gained 38.1 points, or 0.69%, to close at 5,532 compared with 5,494 in the previous session, according to DSE data. The other two major indices also advanced. The Shariah-based DSES rose 7 points, while the blue-chip DS30 gained 8 points.

Meanwhile, market turnover surged nearly 18% to Tk655 crore, while market capitalisation increased by more than Tk3,257 crores to Tk6.92 lakh crore, according to DSE data.

Market breadth was positive, with 67% of the traded stocks advancing. A total of 80 issues declined, while 47 remained unchanged.

Driven by rising indices and positive market breadth, stocks advanced in three of the five trading sessions during the week.

The DSEX posted a net gain of 17 points over the week, gaining 153 points in three sessions against a cumulative loss of 136 points in the other two.

EBL Securities in its daily market commentary said, the benchmark index of the capital bourse closed the week with sustained recovery momentum for a third consecutive session, as investors' strong buying appetite defied concerns over the market's near-term trajectory stemming from geopolitical tensions in the Gulf region, while signs of improving domestic gas supply to industrial areas provided some relief to investor sentiment.

"Market momentum remained firmly positive throughout the session despite mild pullbacks in the first hour from sellers, while a sustained broad based buying interest continued to reinforce the prevailing upward trend, it said.

On the sectoral front, Textile sector stocks accounted for the highest share by 26.3% of turnover, followed by General Insurance by 14.9% and Bank 12.4%.

Sectors mostly displayed positive returns, where Mutual Fund by 3.6%, General Insurance by 3% and Cement 1.9% exhibited the most gains, while only Travel exhibited the marginal corrections on the bourse today.

Bangladesh Bank has removed the term "large industry" from its Tk20,000 crore pre-financing scheme for reopening closed industrial and service-sector businesses, potentially expanding the pool of businesses eligible for the facility.

The central bank's Banking Regulation and Policy Department-1 issued a circular letter today (17 September), amending several provisions of the original circular issued on 4 June and a subsequent circular letter issued on 7 July.

Under the revised directive, references to "large industry" in the earlier circulars will be replaced with "industry", removing the previous qualification from the relevant provisions.

Bangladesh Bank launched the Tk20,000 crore "Closed Industry and Service Sector Support Pre-financing Scheme" in June to help restart businesses that have shut down. Under the scheme, banks can obtain funds from the central bank at 4% interest and lend to customers at a maximum rate of 7%.

The latest circular also clarifies the application window. Subject to the availability of funds, eligible businesses can apply for pre-financing at any time during the scheme's three-year tenure.

Banks receiving funds under the scheme will pay Bangladesh Bank interest at 4%. However, interest payments will begin six months after the pre-financing is received, with the outstanding interest for the first two quarters payable at that point.

For borrowers, the interest rate is capped at 7%. Banks will also start collecting interest six months after disbursing the loan, including the interest accrued during the first two quarters.

The Bangladesh Bank said the revised directive would take effect immediately, allowing eligible businesses to seek the facility throughout the three-year tenure, subject to fund availability.

Current financial year's opening two month's borrowing of Tk 128.72 billion takes government's bank debt to a worrying total of Tk 6.98 trillion, as it turns increasingly to commercial lenders to meet financing needs.

A good sum of the money it borrowed at the outset of the fiscal year 2026-27, however, went for repaying back loans taken from the central bank of Bangladesh.

The government borrowed Tk 128.72 billion from the banking system during July-August while repaid Tk 37.28 billion to the central bank during the same period, according to Bangladesh Bank (BB) data.

The borrowing came from scheduled commercial banks as the government sought to meet development expenditure, social programmes, salaries and other recurrent expenses amid sluggish revenue collection.

Government's debt buildup to Tk 6.98 trillion raises concerns over its growing reliance on domestic bank financing and the potential implications for private-sector credit and investment.

For the current fiscal year, the government has set a target of borrowing Tk 1.12 trillion from the banking system. At the same time, revenue collection has failed to keep pace with the government's expending needs, increasing pressure on its cash position.

People familiar with the developments have said the government demand for cash has increased recently as revenue collection has not achieved the desired growth. At the same time, the government has had to borrow more from the banking sector to meet development expenditure, salaries and allowances, and other operational expenses.

Its excessive dependence on banks for funds could also create a crowding-out effect on credit flow into the private sector. If the government borrows more, a large portion of banks' funds goes to the public sector, potentially reducing the availability of loans for private entrepreneurs seeking to make fresh investment or expand commercial operations.

To reduce pressure from bank borrowing, analysts say, it is necessary to increase revenue collection, improve efficiency in tax administration and ensure greater discipline in government expenditure.

At the same time, strengthening domestic resource mobilisation could reduce dependence on bank borrowing, they add.

Meanwhile, the government is paying down its central bank loans.

Government debt to the central bank dropped by Tk 37.29 billion in the first two months of the fiscal year following recent payback

Excluding this repayment, the government's bank borrowing during the first two months of the current fiscal year stood at Tk 128.72 billion.

The government borrowed this amount through the Ways and Means Advance facility.

Ways and Means Advance is a short-term lending facility provided by the central bank to the government. This facility is used to meet temporary shortfalls or mismatches between the government's daily income and expenditure.

It is not a long-term loan but a temporary mechanism to maintain cash flow. Under the facility, the central bank provides funds to meet government's temporary cash shortage, and the loan generally has to be repaid within 90 days or three months.

When the government borrows from the central bank, it is considered financing through the creation of new money.

Syed Mahbubur Rahman , Managing Director & CEO of Mutual Trust Bank PLC, says government borrowing is a normal part of fiscal financing, but the key concern is its sustainability.

"Bangladesh's tax-to-GDP ratio remains one of the lowest among comparable economies, so strengthening revenue mobilisation has to be a priority. A broader and more efficient tax base would reduce the government's dependence on borrowing and create greater fiscal space for productive investment."

At the same time, the government needs to be very prudent in selecting projects, with greater emphasis on projects that generate economic returns and, where appropriate, sustainable revenue streams, rather than creating long-term fiscal burdens, he has stated.

In the fiscal year 2026, the government's bank borrowing exceeded the revised target by around Tk 220.00 billion, which indicates the extent of the trend. Bangladesh Bank data and recent reports also show that the government's FY26 borrowing exceeded its revised target amid weaker-than-expected revenue collection and higher financing requirements.

According to the latest report of Bangladesh Bank, the government's total outstanding borrowing from the banking system stood at Tk 6.98 trillion as of August. Of this, the government's total outstanding borrowing from the central bank stood at Tk 903.23 billion.

The government's total outstanding borrowing from commercial banks stood at more than Tk 6.08 trillion.

According to the data, the government borrowed over Tk 10.32 billion from non-bank financial institutions during the first two months of the current fiscal year.

At the end of the previous 2025-26 fiscal year, the government's outstanding bank borrowing stood at Tk 6.85 billion. At the end of the preceding 2024-25 fiscal year, the government's bank borrowing stood at over Tk 5.51 billion.

In the previous 2025-26 fiscal year, the government borrowed more than the target.

The government's net borrowing target from the banking sector was Tk 1.04 trillion in fiscal year 2025-26. However, by the end of the fiscal year, the government borrowing from banks stood at Tk 1.35 trillion. Mr Rahman said, "This is particularly important looking ahead. As the investment environment improves and private-sector credit demand recovers, continued heavy government borrowing from the banking system could put pressure on the availability and cost of funds for businesses, creating the potential for crowding out."

External borrowing also needs careful management, given the future foreign-currency repayment obligations. Ultimately, stronger revenue mobilisation, prudent borrowing and disciplined selection of productive projects will be essential to maintain fiscal sustainability while ensuring adequate financing remains available for private-sector growth, the MTB MD added.

Dr Masrur Reaz, chairman of Policy Exchange Bangladesh, says the government's growing reliance on bank borrowing reflects the pressure created by weak revenue mobilisation and a widening financing requirement.

"Borrowing from commercial banks may help the government manage its immediate cash-flow and financing needs, but sustained dependence on bank financing can gradually increase the government's interest burden and put pressure on the availability of funds for the private sector," he has said.

He suggests that the government should place greater emphasis on strengthening revenue collection, broadening the tax base and improving tax administration rather than relying increasingly on domestic borrowing.

"Unless revenue mobilisation improves significantly, higher government borrowing could crowd out private investment over time, particularly if credit demand from the private sector recovers.

"Fiscal discipline and stronger domestic resource mobilisation are, therefore, critical to reducing the government's dependence on bank borrowing," Dr Reaz concludes.

Bangladesh has paused in borrowing from Japan as its interest rate on development finance has been steeply hiked and Dhaka's request for reconsidering the tightened terms went unheeded, officials say.

The rate of interest on Japanese development assistance has been raised for a six-month spell to 3.05 per cent, and it could go up to 3.55 per cent from next month, they have said.

Bangladesh used to enjoy an interest rate as low as 1.0 per cent in borrowing from the Japanese development-financing agency-- the Japan International Cooperation Agency (JICA)-until a few years ago.

In response to the steeper borrowing costs, Bangladesh has refrained from signing any new loan packages with its largest bilateral lender, they have said.

"Japan has recently informed us that the new rate is revised on global funding dynamics. This is not only for Bangladesh. This is for all borrowing countries of the Japanese ODA," a senior Ministry of Finance (MoF) official told The Financial Express.

"After the interest-rate hike in April, we requested Japanese lender - the Japan International Cooperation Agency--to reduce the rate for Bangladesh in view of global and local shocks."

For the current six-month window spanning from April to September, Tokyo ramped up interest rates for funding Bangladesh to a steep 3.05 per cent in April last.

The rate rise marks a drastic shift from historical agreements. Even as recently as 2022, Japanese Official Development Assistance (ODA) carried highly concessional rates below 1.0 per cent.

Once-most-concessional loan has become costlier as Japan has proposed to raise its interest rate by 30-percentage points to 3.05 per cent for lending to Bangladesh.

Earlier, the JICA used to charge 2.35 per cent on its loans against different development projects in Bangladesh.

Even three years ago, the interest rate for the Japanese loan was less than 1.0 per cent, the officials point out.

The Japanese development financier also charges a 0.02 per cent front-end fee for almost all the loans extended to Bangladesh, officials have said.

Bangladesh needs to repay the loans taken from Japan in 30 years wherein it will get 10 years as grace period for the payback.

As a least-developed country (LDC) with low income, Bangladesh had enjoyed Japanese loans with only 0.1 per cent interest until 2015.

Not only the rate for the infrastructure-related project loans has already gone up, the rate for the consultancy credit has also been raised to 1.0 per cent from the earlier rate of nearly 0.85 per cent, according to the Economic Relations Division (ERD) officials.

"The lending rate will be effective for six months up to this September as the JICA changes its lending terms and conditions for Bangladesh half-yearly," says one official.

A senior ERD official has said a fresh lending rate would be set from next month, October, with the indicative rate jacked up to 3.55 per cent.

Alarmed by the compounding strain on the national treasury, the Ministry of Finance and the ERD had formally lobbied Japanese authorities for a rate reduction, citing internal macroeconomic vulnerabilities and external economic shocks.

However, Japanese officials have maintained that the pricing adjustment stands firm, attributing it to shifts in global funding costs, inflation dynamics, and the broader normalisation of Japan's monetary policy.

Faced with a 3.05-percent price tag alongside a standard 0.02-percent front-end fee, Bangladeshi policymakers have quietly frozen new commitments with the lending agency JICA.

Official sources confirm that no fresh credit tranches have been finalised since the implementation of the hike in April.

Analysts note that at more than 3.0 per cent, Japanese funding has lost its long-held competitive advantage, now tracking higher than foundational lending rates from multilateral institutions like the World Bank and the Asian Development Bank, and even from China.

While legacy infrastructure megaprojects like Dhaka Metro Rail and Matarbari deep-sea port continue under previously secured funding tranches, new or pipeline development projects remain in limbo.

The ongoing stalemate highlights a critical turning point in the bilateral economic relationship, as Bangladesh balances its aggressive infrastructure ambitions against the tightening realities of increasingly expensive global debts.

Bangladesh currently is repaying loans from the World Bank at 1.75-percent interest, that from the ADB at 2.0 to 4.5 per cent, China at 2.0 per cent and IDB 2.0-4.0 per cent.

Japan is the single-largest bilateral development partner of Bangladesh-a position it has held consistently since 2012.

Since Bangladesh's independence in 1971, Japan has provided the country with approximately $33.62 billion in cumulative official development assistance, or ODA.

Stocks edged out a gain last week as renewed buying interest in beaten-down shares, improved expectations for industrial gas supplies and regulatory engagement with leading brokers helped the Dhaka Stock Exchange (DSE) recover from a prolonged downturn.

The DSEX, the benchmark index of the DSE, gained 16 points over the week to close at 5,532, while the blue-chip DS30 rose nearly five points to 2,101.

Despite the modest gains in the indices, market breadth remained weak, with 213 issues declining against 147 advancing, while 26 remained unchanged.

Daily average turnover edged up 0.11% to Tk554 crore, indicating little change in overall trading activity.

Meanwhile, the market capitalisation fell by around Tk700 crore during the week.

EBL Securities said the market started the week on a weak note as persistent concerns over the nationwide energy crisis and renewed geopolitical tensions in the Gulf region kept investors cautious. The DSEX briefly fell below the 5,400-point threshold as investors focused on limiting portfolio losses amid heightened uncertainty.

However, investor sentiment improved in the latter half of the week following government assurances to address industrial gas supply constraints and regulatory engagement with leading brokers. The developments encouraged investors to accumulate beaten-down stocks, helping the benchmark index advance for three consecutive session.

"Broader investors' perspective improved" following the policy-level developments, EBL Securities said in its weekly assessment, while cautioning that domestic challenges and geopolitical uncertainties continued to weigh on investor confidence and could limit the scope for a sustained recovery.

Sheltech Brokerage also attributed the market rebound to renewed buying interest and improving investor sentiment. The brokerage said expectations surrounding the regulator's engagement with leading brokerage firms, reports of improving gas supply conditions and Moody's revision of Bangladesh's economic outlook from negative to stable contributed to the recovery.

The market had remained under strong selling pressure early in the week amid heightened tensions in the Middle East and concerns over energy supplies. However, buying interest strengthened from the middle of the week following the regulatory meeting and reports of better gas availability, extending the recovery for three consecutive sessions.

The banking sector played a notable role in supporting the benchmark, with BRAC Bank, Pubali Bank, IFIC Bank and Dutch-Bangla Bank among the major index contributors. LafargeHolcim Bangladesh also helped lift the index.

Investors were most active in textile stocks, which accounted for 25.7% of total turnover, followed by general insurance at 15.6% and banks at 11.1%. Sectoral performance was mixed. Cement led the gainers with a 1.7% rise, followed by general insurance at 1.5% and banking stocks at 1.1%.

On the other hand, life insurance declined 1.3%, while miscellaneous and mutual fund sectors each fell 1.2%.

Envoy Textile topped the weekly turnover chart, followed by Sharp Industries, Saiham Textile, Eastern Bank and Paramount Textile, reflecting strong trading interest in textile and banking counters.

Al-Haj Textile emerged as the biggest gainer, soaring 20.6% over the week. Bangladesh National Insurance gained 18.4%, Information Services Network 17.5%, Meghna PET 16.4% and Apex Spinning 10%.

BD Thai Food was the biggest loser, falling 15.9%, followed by Saif Powertec with a 10.3% decline, Fareast Life Insurance 10.1%, CAPM BDBL Mutual Fund 8.9% and Midas Finance 7.8%.

Merging weak banks with other lenders alone will not resolve the ongoing crisis in the banking sector, said Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank.

The full extent of this sector's financial distress has yet to emerge, as non-performing loans, capital shortages, provisioning requirements, liquidity pressures and governance weaknesses need to be addressed simultaneously, he said.

"Giving fresh capital or merging a bank does not automatically make a weak bank sustainable," he said at a discussion, "Financial Condition of the Banking Sector", jointly organised by the Capital Market Journalists Forum and CFA Society Bangladesh in Dhaka today (19 September).

Mahbubur, former chairman of the Association of Bankers, Bangladesh (ABB), said the volume of non-performing loans in the banking sector was around Tk28,000 crore in 2008 but has now exceeded Tk600,000 crore, accounting for more than 32% of total loans.

Many rescheduled loans could also become classified again in the future, he warned.

According to a CFA Society Bangladesh analysis based on Bangladesh Bank data, the banking sector's NPL ratio stood at 32.8% in June 2026. As of December 2025, the top five banks accounted for 51.87% of total NPLs, while the top 10 accounted for 73.63%.

Mahbubur said implementing International Financial Reporting Standard (IFRS) 9 could provide a clearer picture of banks' credit risks and provisioning requirements, potentially putting additional pressure on the capital positions of some banks.

"There is no such thing as giving Tk50,000 crore today and fixing a bank tomorrow," he said.

On the government's initiative to merge five weak banks, he said a merger between a strong bank and a weak or specialised bank could create operational synergies, but merging one weak bank with another weak bank may not deliver the expected benefits.

After a merger, overlapping branches, employees and management structures need to be reduced to lower operating costs and improve efficiency, he said, adding that simply changing ownership or the name of a bank while retaining the existing structure would not deliver the real benefits of consolidation.

The CFA Society analysis showed that deposits grew 10.74% in June 2026, while private-sector credit increased only 4.47%. Meanwhile, banks' investments increased 30.3%. In 2025, investment in government securities reached 14.1% of total banking-sector assets.

Mahbubur said the rise in investment in government securities while loans and advances were declining at many banks could generate income in the short term, but could not replace banks' core business.

"The core business of a bank is to lend and take deposits. Therefore, a decline in net interest income is a bad sign for banks and the banking industry as a whole," he said.

The sector's net operating profit increased 116% to Tk32,108 crore in 2025, but provisioning against bad loans rose to Tk249,600 crore.

The sector's overall capital adequacy ratio also fell to negative 2.64% at the end of 2025, against the regulatory minimum of 10%. However, 42 banks met the requirement, representing 60.51% of total sector assets.

Mahbubur said banks need to increase low-cost deposits, particularly CASA, and use technology to reduce operating costs. Rather than indiscriminate layoffs, banks should improve productivity through technology and efficiency.

He said stronger governance, accurate assessment of banks' financial condition, adequate provisioning and compliance with international accounting standards are essential for restoring stability.

"To make the banking sector sustainable, we need more than mergers. We need targeted restructuring where necessary and structural reforms across the sector," he said.

Bangladesh and Turkey have discussed ways to expand bilateral cooperation in the energy sector, particularly in renewable energy, mineral resources and LNG-related infrastructure.

The discussions also covered pipeline connectivity linking Bangladesh's offshore and island facilities with the mainland.

The issues were discussed at a recent meeting between Turkey's Energy and Natural Resources Minister Alparslan Bayraktar and Bangladesh Ambassador to Turkey M Amanul Haq at the Ministry of Energy and Natural Resources in Ankara.

According to the Bangladesh Embassy, the two sides explored potential areas of practical cooperation in the energy and mineral resources sectors and discussed opportunities to further strengthen bilateral collaboration.

During the meeting, Ambassador Haq handed over an invitation letter from Bangladesh Foreign Minister Khalilur Rahman, inviting Minister Bayraktar to visit Bangladesh at a mutually convenient early date.

Baraktar warmly accepted the invitation and expressed his intention to visit Bangladesh by the end of this year.

The Turkish Minister also instructed his officials to prepare a Memorandum of Understanding (MoU) for signing at the next possible opportunity, the Bangladesh Embassy said.

Ambassador Haq also handed over a proposed draft MoU between Bangladesh's Ministry of Power, Energy and Mineral Resources and Turkey's Ministry of Energy and Natural Resources, aimed at establishing a framework for enhanced bilateral cooperation in the energy sector.

The meeting was attended from the Bangladesh side by Deputy Chief of Mission Shahanoor Alam and Commercial Counsellor Akram Hossain of the Bangladesh Embassy in Ankara.

Senior officials from Turkey's Ministry of Energy and Natural Resources also attended the meeting.

The Federal Reserve yesterday (16 September) raised interest rates by 0.25 percentage points from 3.50-3.75% to 3.75-4.00% as inflation has become a concern. With this rate hike, the Fed aims to reduce borrowing and spending, cool demand, and bring inflation under control.

Inflation in the USA remains above the Federal Reserve's 2% target. As of July 2026, inflation was 3.7%. Higher energy prices, import tariffs, and strong investment and demand have continued to push prices higher.

With higher interest rates, loans are expected to become more expensive for households and businesses. This generally discourages consumption and investment and gradually eases price pressures.

Although the Fed raised US interest rates, its impact extends to the global economy through multiple channels. Higher rates make dollar-denominated investments more appealing, which encourages international investors to shift funds to the USA. This increases demand for dollars and strengthens the dollar, while currencies in developing countries come under downward pressure.

For governments and companies, borrowing dollars also becomes more expensive. Developing countries that seek new international financing may have to accept higher interest rates. Their repayment conditions could also become more difficult. Countries with large external debts, limited foreign-exchange reserves, or high levels of short-term borrowing are more likely to face increased pressure.

Global commodity markets may have an indirect impact. If rising US interest rates curb worldwide economic growth, demand for oil and other commodities could fall, lowering prices. This might benefit import-dependent countries like Bangladesh.

However, this relief remains uncertain because geopolitical tensions, conflicts, and supply disruptions can still affect global energy prices.

Besides, a stronger US dollar might offset some declines in international commodity prices. Since Bangladesh pays for most imports in dollars, a weaker taka could limit the benefits of moderate drops in oil, gas, fertiliser, or food prices for Bangladeshi consumers and businesses. The overall impact will hinge on changes in global commodity prices and the USD/BDT exchange rate.

In Bangladesh, a key issue is the increased pressure on the Bangladeshi Taka (BDT). A stronger dollar would raise the local cost of imported fuel, food, fertiliser, machinery, and industrial raw materials.

This could lead to higher inflation, increased production costs, and reduced household purchasing power. Businesses that rely heavily on imported inputs may face profitability challenges and may pass some of these costs on to consumers.

In such situations, Bangladesh Bank may feel compelled to sell dollars from its foreign-exchange reserves to curb excessive exchange-rate volatility. Some intervention may be necessary to prevent disorderly swings and sudden market instability.

However, consistently drawing on reserves to keep the exchange rate artificially stable is unsustainable. The BDT should be allowed to adjust gradually and transparently in line with market conditions. A credible exchange-rate system helps reduce uncertainty for importers, exporters, foreign investors, and remittance senders.

Bangladesh's external debt costs could rise as USD interest rates increase. Government agencies and private companies with variable-rate or dollar-denominated loans could face higher interest payments. Additionally, if the taka depreciates, repayment costs will rise further, as borrowers will need more taka to buy each dollar.

New foreign borrowing for infrastructure, power, energy, and private investment could become more expensive. Therefore, projects should be selected carefully. Foreign loans should be directed to economically viable projects that can generate sufficient economic returns or foreign exchange earnings. Projects with poor financial prospects could strain the budget and external debt repayment obligations.

The USA is the biggest market for Bangladesh's ready-made garments (RMG). If high interest rates curb US consumer spending, demand for clothing and other non-essential products might decline. Bangladeshi exporters could see fewer orders, face increased pressure from buyers to lower prices, and experience thinner profit margins. Smaller factories, with less ability to absorb rising financing, energy, and input costs, may be especially at risk.

However, a quarter-percentage-point hike alone probably would not lead to a sharp drop in garment demand. The overall effect will depend on factors like the US labour market strength, consumer confidence, inflation, and economic growth.

Bangladesh's competitiveness will also be affected by exchange-rate changes in countries such as Vietnam, India, China, and Pakistan. If their currencies depreciate faster than the taka, Bangladeshi exporters may face increased competition.

As a remittance-receiving country, Bangladesh may also feel the impact. However, the impact on remittances could be mixed. A stronger dollar boosts the taka value of remittances for Bangladeshi families, supporting household spending.

Still, formal remittance inflows will remain robust only if banks offer competitive exchange rates and the gap between formal and informal rates stays narrow. The government must encourage migrant workers to use official channels through transparent, market-driven exchange rates, faster transfer services, and lower costs.

As far as investment is concerned, higher returns on safer US assets might make foreign investors more cautious about Bangladesh, though significant portfolio outflows are unlikely. Investment decisions are strongly influenced by challenges such as energy shortages, regulatory uncertainty, exchange-rate risk, and difficulties repatriating profits.

These internal limitations may matter more than short-term portfolio shifts. Therefore, Bangladesh must strengthen its domestic investment environment, which is particularly crucial now.

Bangladesh Bank decreased policy rates on 30 July 2026 by 50 basis points, from 10% to 9.5%. This move aimed to bolster economic growth, promote private investment, and enhance credit flow following a lengthy period of restrictive monetary policy.

It also reflected concern over sluggish economic activity and subdued private-sector credit growth. Currently, Bangladesh Bank's room to lower domestic interest rates further is limited, given that inflation remains high.

While affordable credit is essential to support investment and employment, hastily lowering rates could weaken the taka, increase dollar demand, and fuel inflation. Therefore, Bangladesh's domestic policy should balance controlling inflation, maintaining exchange-rate stability, safeguarding financial sector health, and ensuring access to productive credit.

Overall, the consequences of the Fed's interest rate hike will depend more on the future path of US rates than on this single increase. Bangladesh should maintain a flexible, stable exchange rate, safeguard reserves, promote remittances through formal channels, restrict costly foreign borrowing, and monitor companies' foreign-currency risk.

At the same time, stronger fiscal discipline, better debt management, and improved banking governance are essential. In the medium term, Bangladesh needs to diversify exports and markets, enhance energy security, boost productivity, and increase investor confidence. These actions would help the economy withstand higher US interest rates and future external shocks.

Fahmida Khatun is a distinguished fellow at the Centre for Policy Dialogue (CPD).

US factory production unexpectedly fell in August and higher oil prices and rising interest rates could offset some of the support from an artificial intelligence buildout, likely keeping activity moderate for the rest of the year.

The decline in output, reported by the Federal Reserve on Friday, followed seven straight months of increases. The US central bank on Wednesday raised interest rates for the first time in three years and flagged further increases in borrowing costs in the months ahead. Oil prices are hovering above $100 a barrel with no end in sight to the US-Israeli war with Iran.

"Looking ahead, we think manufacturing output will rise a little further over coming months, but will fail to match the pace set in the first half of this year," said Samuel Tombs, chief US economist at Pantheon Macroeconomics.

"Some manufacturers likely will find that demand softens as they pass on higher energy prices to consumers."

Manufacturing output dropped 0.3 percent last month following an unrevised 0.2 percent rise in July. Economists polled by Reuters had forecast production would increase 0.3 percent. Output advanced 0.9 percent on a year-over-year basis in August, a modest increase that, according to some economists, indicated the Trump administration's aggressive trade policy had not had the desired effect of rejuvenating the nation's industrial base.

Production in the sector, which accounts for about 9.4 percent of the economy, received a boost in prior months as businesses rushed orders to avoid shortages and higher prices from the escalation of the war in the Middle East.

The decline in August was led by a 0.5 percent drop in the production of long-lasting manufactured goods. Motor vehicles and parts production decreased 1.2 percent, notching a second straight monthly decline. Output of computers and peripheral equipment fell 1.4 percent, but was up 5.5 percent on a year-over-year basis.

Production of communications equipment increased 0.8 percent. Though the output of semiconductors and related electronic components dipped 0.1 percent, this category was up 12.4 percent from a year ago.

The AI spending spree has cushioned the blow from import tariffs on manufacturing. Some economists are still betting on a strong manufacturing performance this year, despite a sharp rise in longer-dated US Treasury yields in recent weeks and the Fed's decision to raise its benchmark overnight interest rate by 25 basis points to the 3.75 percent-4.00 percent range.

POSSIBLE TAILWIND FROM HIGHER DEFENSE SPENDING

"We still look for manufacturing activity to pick up through next year, and the AI infrastructure buildout is a key reason for our sanguine outlook," said Bernard Yaros, lead U.S. economist at Oxford Economics. "The demand case for AI still seems strong enough to shrug off higher-for-longer rates and increased geopolitical risk. Greater defense spending will also act as another tailwind."

Restocking by businesses that have run down inventories for five straight quarters to meet robust demand could also provide a lift to manufacturing, though some economists argued that trend could be overshadowed by the drag from rising costs.

Production of nondurable goods was unchanged after falling 0.4 percent in July. Rises in output at textile mills as well as for apparel and leather products were offset by declines in the production of plastics and rubber goods, and petroleum and coal.

"Factory output shows the first signs of a slowdown which could worsen if the geopolitical headwinds intensify and diesel fuel prices do not come back down," said Christopher Rupkey, chief economist at FWDBONDS. "Soaring energy prices are costly for industry and higher diesel prices may start to chip away at the manufacturing renaissance picture painted by White House economic officials."

Mining production edged up 0.1 percent last month, matching the rise in July. Oil and gas well drilling increased 0.9 percent after accelerating by 5.2 percent in July.

Utilities production shot up 1.8 percent after climbing 0.5 percent in July. Overall industrial production was unchanged last month after gaining 0.2 percent in July. Industrial output advanced 1.4 percent on a year-over-year basis in August.

Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, was unchanged at 76.3 percent in August. It is 3.1 percentage points below its 1972–2025 average.

The operating rate for the manufacturing sector fell 0.3 percentage points to 75.7 percent. It is 2.5 percentage points below its long-run average.

"There is no evidence here that tariffs or anything are generating an influx of new jobs in manufacturing and industry," said Carl Weinberg, chief economist at High Frequency Economics.

Bangladesh Jewellers Association (BAJUS) has raised gold prices again, increasing the price of 22-carat gold by Tk1,691 per bhori to Tk2,34,621, including VAT.

BAJUS announced the new prices in a notice today, saying the price of tejabi gold (pure gold) had increased in the local market. Considering the overall market situation, the association revised the prices, which came into effect from 10am today (19 September).

Under the new rates, one bhori (11.664 grammes) of 21-carat gold has been set at Tk2,24,065 per bhori, 18-carat gold at Tk1,92,398 and traditional-method gold at Tk1,57,172.

BAJUS said the new prices will remain effective at all jewellery shops until further notice. However, labour charges will apply depending on the design of the jewellery.

As VAT is included in the selling price of gold and silver jewellery, jewellers cannot collect VAT separately from customers. BAJUS's previous rules will remain in place for jewellery exchange and purchase, excluding specified VAT, labour charges and the price of stones.

BAJUS last adjusted gold prices on 12 Sept, when it raised the price of 22-carat gold by Tk1,050 per bhori to Tk2,32,930, including VAT.

So far in 2026, gold prices in the country's market have been adjusted 116 times. Prices have been raised on 58 occasions, lowered on 57 occasions, and VAT adjusted once.

Meanwhile, silver prices have also been increased. The price of 22-carat silver has been raised by Tk116 per bhori to Tk5,132, including VAT.

The price of 21-carat silver has been set at Tk4,957 per bhori, 18-carat silver at Tk4,257 and traditional-method silver at Tk3,208.

Silver prices have been adjusted 70 times so far in 2026, with prices increased on 36 occasions and reduced on the remaining 34 occasions.

The Insurance Development and Regulatory Authority (IDRA) will take stricter measures against non-complying distressed insurance companies, its chairman has said.

“We are prepared to go much further if necessary,” said Mir Nadia Nivin, chairman of IDRA, referring to insurers currently under financial distress.

Its regulatory tools include suspending first-year premium collection, cancelling licences, appointing administrators and, ultimately, liquidating companies, she shared in a recent interview with The Daily Star.

“Sixty percent of the time, I will work as a partner to support the companies, but 40 percent of the time I will act as a regulator,” she said. “If they do not comply with the regulator’s instructions, they cannot be allowed to continue doing business.”
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Fareast Islami Life Insurance Company Limited illustrates the scale of the challenge. The company has outstanding claims of around Tk 3,000 crore, while its recoverable assets could amount to roughly Tk 1,200-Tk 1,300 crore, according to Nadia.

The company’s first-year premium collection has been suspended, preventing it from expanding its business while its existing obligations remain unresolved.

“If you sell a policy knowing that you will not be able to pay the claim, that can amount to fraud,” she said.

Nadia said the regulator’s immediate objective is to use available assets to pay as much as possible, rebuild confidence and then assess whether the company can be turned around.

But resolving the sector’s immediate crisis is only one part of her reform agenda. Her longer-term goal is to transform insurers into a significant institutional investor class.

In developed economies, she said, life insurers invest over long periods because their liabilities themselves are long term. Bangladesh could use the same model to finance infrastructure.

The government appointed Nadia as the chairman of the IDRA for a three-year term in June this year.

A Bangladeshi governance and institutional reform specialist, she served as a member of the Electoral System Reform Commission, established by the interim government in October 2024.

She said Bangladesh’s insurance sector needs deep institutional reform, stronger financial discipline and a fundamental shift in governance if it is to regain public confidence and emerge as a major source of long-term investment.

Nadia said she took charge of IDRA because she believed her reform experience could be applied to a sector facing entrenched irregularities and a severe trust deficit.

Her immediate priority, however, is ensuring that policyholders receive the money they are owed.

Insurance penetration in Bangladesh is only around 0.3 percent and has been declining, she said, reflecting a growing loss of confidence among customers who often do not receive claims on time.

“When I came into this position, I realised that the biggest reason for the sector’s trust deficit is that people are not getting their claims on time,” Nadia said.

IDRA has therefore begun with the most distressed insurers, particularly seven or eight companies with large volumes of unsettled claims. Their owners and management have been brought into governance review meetings, while the regulator has begun examining their assets, liquidity and ability to pay.

Nadia said companies cannot use past management failures as an excuse for avoiding their obligations.

“Under Bangladeshi law, a company is a separate entity. Whatever the previous board did is a different issue. The company remains responsible to its policyholders,” she said.

IDRA has collected information on the assets of the distressed companies, including government bonds, fixed deposits, bank balances and land.

It is also working with Bangladesh Bank to release funds trapped in financially vulnerable banks so that the money can be used for claim settlement.

Land assets are being identified, valued and prepared for sale where necessary.

To prevent funds raised through asset sales, bond liquidation or fixed deposits from being diverted elsewhere, the companies have been instructed to maintain separate bank accounts for claim payments. Auditors have been assigned to monitor those accounts, with regular statements being submitted to IDRA.

Payments are being made on a first-in, first-out basis, with claims verified by auditors.

As part of this, a total of Tk 37.54 crore in insurance claims has been paid to 8,417 policyholders of seven troubled life insurers in two phases under an initiative of IDRA.

In the first phase, Tk 14.51 crore was paid to 2,549 policyholders of BAIRA Life Insurance, Fareast Islami Life Insurance, Golden Life Insurance, Homeland Life Insurance, Padma Islami Life Insurance, Progressive Life Insurance and Sunflower Life Insurance.

In the second phase, Tk 23.03 crore was paid to 5,868 policyholders of Padma Islami Life Insurance, Homeland Life Insurance, Fareast Islami Life Insurance, Sunflower Life Insurance and Sunlife Insurance.

Strengthening the industry will require reforms inside individual companies as well. IDRA is examining life funds, actuarial valuations, paid-up capital, special audits, investment practices and compliance with previous audit recommendations, she said.

One concern is that actuarial valuations may sometimes rely on assumptions that make a company’s financial position appear stronger than it actually is, she added.

Because the actuarial market in Bangladesh is small and potential conflicts of interest exist, IDRA plans to retain an independent third-party actuary, potentially from overseas, to review the basis used by insurers for their valuations, she mentioned.

The authority has also tightened controls over paid-up capital. In coordination with Bangladesh Bank, insurers will no longer be able to withdraw, pledge or otherwise transact against paid-up capital without IDRA’s authority.

Investment practices are another area of scrutiny.

Nadia said insurers need to reduce their exposure to land, with the regulator seeking to bring land investment within the permitted 20 percent threshold. Companies with excess land holdings may be required to liquidate those assets and place the proceeds into appropriate investments.

At the same time, IDRA is trying to improve the quality of company leadership. Several insurers still have interim or acting chief executives and managing directors. The regulator plans to create a broader, pre-vetted pool of candidates rather than limiting recruitment to people with insurance-sector experience, she said.

“We do not believe they necessarily have to come from the insurance sector,” Nadia said. “They can come from banking or other parts of the financial sector.”

Climate risk is another area where she sees scope for innovation.

IDRA is working on parametric insurance products, where payouts are triggered automatically by predefined events rather than requiring conventional claims assessment.

A flood insurance pilot linked to the Jamuna River project has already made payouts of around Tk 14 crore across five districts through mobile financial services, she said.

Crop insurance is also being developed with the Ministry of Agriculture, while a small heat-insurance pilot is being considered with support from the Asian Development Bank.

The regulator plans to use its regulatory sandbox to test innovative products before wider rollout. Ultimately, however, Nadia believes the sector cannot be transformed without better data and stronger supervision.

IDRA’s public dashboard, which previously provided information on claims, lapsed policies and other indicators, has not been regularly updated in recent years.

The authority now plans to restore the dashboard as part of a broader shift towards risk-based supervision, she added. Once the system is fully operational, IDRA should be able to monitor insurers in near real time, including how many claims they are settling.

“Claim settlement will be one of our indicators,” Nadia said. “If claim settlement keeps increasing, we will know that our initiatives are working.”

For her, the broader challenge is to move insurance away from being viewed primarily as a product sold to customers and towards becoming a financially disciplined institution capable of protecting policyholders, supporting the capital market and mobilising long-term funds for the economy.

That will require stricter regulation, but also cooperation from insurers, she added.

Bangladesh is set to join the global nuclear-power community with the first unit of the Rooppur Nuclear Power Plant now moving into commissioning. The Russian-built VVER-1200 reactor is designed to produce 1,200MW of gross capacity, while the two-unit plant will eventually have 2,400MW.

Where does Bangladesh rank? It does not yet have a meaningful ranking among nuclear-power producers because Rooppur has only just entered commissioning and has not established a record of commercial electricity generation. Once operational, Bangladesh will join the group of 31 countries that currently operate nuclear power reactors.

The latest IAEA (International Atomic Energy Agency) statistics list 417 reactors operating in those 31 countries, with total net capacity of about 380GW, according to pris-stats.iaea.org.

The leading nuclear-power countries are very different in scale. The United States has more than 90 operating reactors, France more than 50, China more than 50, Russia more than 30, South Korea more than 25 and India more than 20, according to the IAEA's reactor database. Bangladesh will begin with two reactors.

The nuclear map is nevertheless expanding. According to the World Nuclear Association, about 35 countries are considering, planning or starting nuclear power programmes, and a further 20 or so countries have at some point expressed an interest in doing so.

The World Nuclear Association currently counts about 80 reactors under construction and another 120 planned worldwide.
Is nuclear power expensive?

Yes — but the answer depends on which cost is being discussed. Nuclear power requires exceptionally high upfront investment. The IEA says nuclear projects are difficult to finance because of their scale, capital intensity, long construction periods and technical complexity. Delays and cost overruns can substantially increase financing costs.

Rooppur's original contract with Russia was worth $12.65 billion, including the first few years' nuclear fuel, with Russia financing 90% through a state loan. Bangladesh was responsible for the remaining 10%.

But the project's cost has since increased. In January 2026, the government approved an additional Tk255.92 billion, taking the project's approved cost from about Tk1.14 trillion to Tk1.39 trillion. The increase is being financed through additional project loans.

Nuclear projects require sophisticated safety systems, specialised buildings and equipment, emergency-response arrangements, trained personnel, security systems, regulatory institutions, radioactive-waste management and, eventually, decommissioning. The World Nuclear Association says these costs should be included when assessing the lifetime cost of nuclear electricity.

Some safety expenditure is visible separately in Bangladesh. For example, the physical-protection system for Rooppur was contracted at about $287.5 million, and TBS reported that this was outside the main project expenditure.

Safety, therefore, is not simply an additional "cost" that can be minimised. It is a fundamental part of a nuclear programme. The World Bank says a credible nuclear programme requires a strong legal and regulatory framework, an independent regulator, skilled personnel, emergency preparedness, long-term waste-management arrangements and robust safety and security systems.

The IAEA's 2025 safety review of Rooppur found good practices, including simulator-based staff training, but also recommended improvements in fire safety, operational supervision and equipment preservation before operation.

The economic attraction of nuclear power comes later: once the plant is built, fuel and other variable operating costs are relatively low and stable. Thus, nuclear is essentially a trade-off between very high upfront capital and financing costs and potentially decades of relatively stable, large-scale electricity generation.

For Bangladesh, the real test therefore begins after the inauguration: whether Rooppur can operate safely, reliably and at high utilisation for decades, while the country manages its debt obligations, nuclear regulation, waste, decommissioning and the substantial institutional infrastructure that a nuclear-power programme requires.

Merging weak banks with other lenders alone will not resolve the ongoing crisis in the banking sector, said Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank.

The full extent of this sector's financial distress has yet to emerge, as non-performing loans, capital shortages, provisioning requirements, liquidity pressures and governance weaknesses need to be addressed simultaneously, he said.

"Giving fresh capital or merging a bank does not automatically make a weak bank sustainable," he said at a discussion, "Financial Condition of the Banking Sector", jointly organised by the Capital Market Journalists Forum and CFA Society Bangladesh in Dhaka today (19 September).

Mahbubur, former chairman of the Association of Bankers, Bangladesh (ABB), said the volume of non-performing loans in the banking sector was around Tk28,000 crore in 2008 but has now exceeded Tk600,000 crore, accounting for more than 32% of total loans.

Many rescheduled loans could also become classified again in the future, he warned.

According to a CFA Society Bangladesh analysis based on Bangladesh Bank data, the banking sector's NPL ratio stood at 32.8% in June 2026. As of December 2025, the top five banks accounted for 51.87% of total NPLs, while the top 10 accounted for 73.63%.

Mahbubur said implementing International Financial Reporting Standard (IFRS) 9 could provide a clearer picture of banks' credit risks and provisioning requirements, potentially putting additional pressure on the capital positions of some banks.

"There is no such thing as giving Tk50,000 crore today and fixing a bank tomorrow," he said.

On the government's initiative to merge five weak banks, he said a merger between a strong bank and a weak or specialised bank could create operational synergies, but merging one weak bank with another weak bank may not deliver the expected benefits.

After a merger, overlapping branches, employees and management structures need to be reduced to lower operating costs and improve efficiency, he said, adding that simply changing ownership or the name of a bank while retaining the existing structure would not deliver the real benefits of consolidation.

The CFA Society analysis showed that deposits grew 10.74% in June 2026, while private-sector credit increased only 4.47%. Meanwhile, banks' investments increased 30.3%. In 2025, investment in government securities reached 14.1% of total banking-sector assets.

Mahbubur said the rise in investment in government securities while loans and advances were declining at many banks could generate income in the short term, but could not replace banks' core business.

"The core business of a bank is to lend and take deposits. Therefore, a decline in net interest income is a bad sign for banks and the banking industry as a whole," he said.

The sector's net operating profit increased 116% to Tk32,108 crore in 2025, but provisioning against bad loans rose to Tk249,600 crore.

The sector's overall capital adequacy ratio also fell to negative 2.64% at the end of 2025, against the regulatory minimum of 10%. However, 42 banks met the requirement, representing 60.51% of total sector assets.

Mahbubur said banks need to increase low-cost deposits, particularly CASA, and use technology to reduce operating costs. Rather than indiscriminate layoffs, banks should improve productivity through technology and efficiency.

He said stronger governance, accurate assessment of banks' financial condition, adequate provisioning and compliance with international accounting standards are essential for restoring stability.

"To make the banking sector sustainable, we need more than mergers. We need targeted restructuring where necessary and structural reforms across the sector," he said.

Over the last couple of years, businesses have raised concerns over high interest rates on loans and urged the Bangladesh Bank (BB) to cut its policy rates to reduce the cost of funds.

The central bank cut its policy rate by 0.5 percentage points to 9.5 percent, effective from August.

Offering the rationale for the cut, BB said tight monetary policy, in place since the first half of fiscal year 2023-24, was doing more harm than good to Bangladesh’s economic recovery while controlling prices.

The impact of the policy rate cut is yet to become clearly visible. However, overall interest rates had begun to decline months before the move.

Data show the weighted average interest rates on deposits and advances rose to 6.42 percent and 12.16 percent respectively in September 2025, the highest levels in at least three years.

Since then, interest rates have gradually fallen. In July, the weighted average deposit and lending rates were 6.21 percent and 11.81 percent respectively.

Yields on treasury bills and bonds, as well as call money rates, also declined in June 2026 from a year earlier, reflecting easing liquidity in the banking sector, the key source of finance in Bangladesh.

Nevertheless, the private sector appears to remain indifferent.

Credit growth to the private sector has remained sluggish, growing by 4.47 percent in June this year, the lowest in 33 years. In July, credit growth picked up slightly to 4.62 percent, still well below BB’s target of 6.8 percent by December this year.

But why is the private sector not borrowing money?

Taskeen Ahmed, president of the Dhaka Chamber of Commerce and Industry (DCCI), said falling interest rates alone cannot revive private-sector borrowing without restoring investor confidence and operational viability.

“The reason behind lower interest rates is to encourage borrowing, but businesses will invest only when they see sufficient demand, stable conditions, and a reasonable return on investment,” he said.

Taskeen, who has been vocal about bringing down the high cost of borrowing, said cheaper credit looks attractive on paper, but entrepreneurs cannot commit capital when high operating costs and weak consumer demand are squeezing profit margins.

“In addition to this, persistent gas and electricity shortages continue to idle factory capacity, while banking sector turmoil, high NPLs, political transition anxieties, and global geopolitical conflicts have severely shaken business sentiment. As a consequence, businesses have shifted into cash-preservation mode,” he said.

Asif Ibrahim, vice-chairman of Newage Group and treasury chief of a private bank, echoed the view.

Beyond interest rates, he said, businesses are concerned about energy shortages, geopolitical turmoil, rising fuel costs and the risk of supply-chain disruptions.

“Many businesses are reluctant to take fresh loans because they are uncertain about future demand, energy supplies and the overall economic outlook. Businesses are not confident that they will be able to generate enough returns from new investment to cover the cost of borrowing,” he said.

At the same time, banks are becoming more cautious about extending fresh credit as non-performing loans rise and vulnerabilities in the financial sector deepen.

The decline in interest rates may itself partly reflect subdued credit demand, according to Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh. When businesses are reluctant to borrow, banks have less incentive to compete aggressively for deposits.

“Falling interest rates should therefore not automatically be interpreted as evidence of improving economic conditions. Although lower rates can ease financing costs for existing borrowers, persistently weak investment risks slowing job creation, productivity growth and economic recovery,” said the economist.

“Cheaper loans cannot compensate for uncertainty about reliable energy supplies, market access and future returns. This is fundamentally a problem of business confidence and structural weaknesses in the investment climate,” he added.

Reviving investment requires reliable energy, greater political and policy predictability, and credible reforms to improve the business environment, not simply cheaper credit, he said.

Deen Islam, professor of economics at Dhaka University, said the bigger concern is what the low credit growth says about investment sentiment.

“If businesses continue to hold back, lower interest rates by themselves will not generate much new investment. Weak borrowing will eventually mean slower expansion of productive capacity, fewer new jobs and weaker productivity growth,” he said.

So, he said, the policy challenge is not simply to make credit cheaper. Businesses also need to feel confident that demand will recover, energy will be available, the exchange rate and regulatory environment will be reasonably predictable, and the banking system will remain stable.

“In that sense, the current situation seems to be less about the price of money and more about whether firms believe that investing now will actually pay off,” added the professor.

Birupaksha Paul, professor of economics at the State University of New York at Cortland, said businesses are reluctant to borrow because borrowing costs remain high while economic growth is weak, making new investment less attractive.

He said many mills and factories are also concerned about political exclusion, which is undermining business and investment confidence.

Unlike the ruling BNP’s previous terms in office in 1991 and 2001, when businesses had greater clarity about the political environment, the current government’s political strategy appears less clear, he added.

Without greater political inclusivity and clarity, he said, businesses are unlikely to regain the confidence needed to increase investment.

DCCI’s Taskeen, meanwhile, said the biggest concern is that delayed investment can weaken productive capacity, reducing future exports and job creation. In addition to cheaper loans, sustained reductions in business costs are needed.

“We believe the bigger challenge over the next one to two years will be how to sustain the private-sector investments already in the country, rather than attracting new investment,” he said.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank PLC, said private sector credit demand has weakened as weaker exports, high inflation and an energy crisis continue to constrain businesses.

Speaking at a discussion titled “Business and Beyond” at The Daily Star on September 10, he said Bangladesh was facing a “double whammy” from global and domestic economic shocks.

Global disruptions, including tariff impositions, the Covid-19 pandemic, the Ukraine war and the Middle East crisis, have hurt exports, particularly to the US and European markets, he said.

He said inflation, although easing from double-digit levels, remained high at around 8.26 percent and had reduced consumers’ purchasing power. As a result, many manufacturing plants that once operated at 80 percent capacity were now running at 40 percent or even 30 percent.

“This naturally has an impact. So, the demand for credit lines has also declined,” he said.

Mahbub identified the energy crisis as a bigger constraint on investment than borrowing costs.

Nearly Tk 33 out of every Tk 100 in loans disbursed by the country’s banking sector are now classified as non-performing, meaning that 33 per cent of loans are in default. By the end of June, non-performing loans (NPLs) had risen to more than Tk 600,000 crore (Tk 6 trillion). Even amid such a crisis, 13 private banks stand out as exceptions, with each reporting an NPL ratio of below 5 per cent.

Senior officials of these banks say that disciplined and independent loan approval processes, careful assessment of borrowers’ repayment capacity, and a focus not only on large corporate loans but also on small and medium-sized enterprises (SMEs) and consumer lending have helped keep NPLs under control.

According to the central bank’s latest data as of June, all 13 banks with NPL ratios below 5 per cent are from the private sector. The group includes both newer-generation banks and first-generation banks. The banks are Community Bank, BRAC Bank, Pubali Bank, Citizens Bank, Prime Bank, City Bank, Eastern Bank, Jamuna Bank, Bengal Commercial Bank, NCC Bank, Uttara Bank, Shahjalal Islami Bank, and Shimanto Bank.

According to the International Monetary Fund’s (IMF) Financial Soundness Indicators and the World Bank’s non-performing loan indicators, Bangladesh currently has the highest level of NPLs in the world. Banking-sector stakeholders say that despite Bangladesh having one of the highest levels of loan defaults globally, some banks in the sector continue to maintain good corporate-governance practices. As a result, these banks have strengthened their financial foundations and have also performed better in terms of profitability.

Banks that are ahead on various financial indicators are also seeing their deposits grow at higher rates than those of other banks. At the same time, these banks have relatively lower levels of non-performing loans.

13 banks with low non-performing loans

According to Bangladesh Bank data, Community Bank has the lowest rate of non-performing loans (NPLs) in terms of percentage. The total amount of loans disbursed by this new-generation bank is also relatively low. As of the end of last June, out of the bank's total disbursed loans of Tk 1,633 crore (Tk 16.33 billion), Tk 5 crore (Tk 50 million) was non-performing. This puts the bank's NPL ratio at 0.33 per cent.

BRAC Bank holds the second position, with an NPL ratio of 2.05 per cent. As of last June, the bank's total disbursed loans stood at Tk 75,621 crore (Tk. 756.21 billion) of which Tk 1,548 crore (Tk 15.48 billion) was classified as non-performing. BRAC Bank is currently the top profit-earning institution among locally-owned banks. Recently, BRAC Bank was featured in US magazine Forbes’ list of the world''s top 500 best-performing banks.

When asked, Tareq Refat Ullah Khan, Managing Director (MD) of BRAC Bank, said: "In credit risk management and loan approval, good governance and proper risk assessment are the main tasks. This is the key to maintaining the quality of BRAC Bank's loans. Loans have been extended by assessing borrowers'' repayment capacity in a completely neutral manner without any unethical pressure. As a result, we have been able to keep non-performing loans under control."

Pubali Bank ranks third on the list of banks with the lowest level of non-performing loans (NPLs) in the country. At the end of last June, the bank’s NPL ratio stood at 2.46 per cent. By then, out of the bank’s total outstanding loans of Tk 72,576 crore (Tk 725.76 billion), Tk 1,789 crore (17.89 billion) was classified as non-performing.

Speaking to Prothom Alo, Pubali Bank Managing Director Mohammad Ali said, “No loan at this bank has been granted based on the sole advice or personal recommendation of me or any senior official. Loans are approved through a fully institutional and systematic assessment process. The borrower’s personal or political identity is also not taken into consideration when granting loans.”

Mohammad Ali further said, “Most of the bank’s large loans have been provided to essential business sectors such as food and food products, education, healthcare, housing, and garments. As a result, a relatively small proportion of our loans have become non-performing. We are now increasing our focus on consumer lending.”

Citizens Bank, a new-generation bank that ranks fourth on the list, had an NPL ratio of 2.65 per cent at the end of last June.

Prime Bank ranks fifth. At the end of last June, the bank’s NPLs amounted to Tk 948 crore (Tk9.48 billion), equivalent to 2.74 per cent of its total loans.
Prime Bank is followed by City Bank in sixth place. At the end of last June, City Bank’s non-performing loans (NPLs) amounted to Tk 1,514 crore (Tk 115.14 billion), equivalent to 2.79 per cent of the bank’s total outstanding loans.

Speaking to Prothom Alo, City Bank Managing Director Masrur Arefin said, “City Bank’s independent loan approval process and diversified lending portfolio have enabled us to keep the NPL ratio under control. SME and consumer lending are providing us with significant comfort. Banks that are placing greater emphasis on SME and consumer lending are performing well.”

Eastern Bank ranks seventh in terms of the lowest NPL ratio. At the end of last June, the bank’s NPLs stood at Tk 1,520 crore (Tk 15.20 billion), representing 3.28 per cent of its total outstanding loans.

From eighth to 13th place are, respectively, Jamuna Bank, Bengal Commercial Bank, NCC Bank, Uttara Bank, Shahjalal Islami Bank, and Shimanto Bank. Among them, the NPL ratio was 3.35 per cent at Jamuna Bank, 4.07 percent at Bengal Commercial Bank, 4.19 per cent at NCC Bank, 4.36 per cent at Uttara Bank, 4.82 per cent at Shahjalal Islami Bank, and 4.88 per cent at Shimanto Bank.
72pc of non-performing loans concentrated in 10 banks

According to Bangladesh Bank data, the total amount of non-performing loans (NPLs) in the country’s banking sector stood at Tk 606,555 crore last June. This represented 32.78 per cent of the banks’ total outstanding loans. Of this amount, Tk 439,526 crore in NPLs was concentrated in 10 banks, accounting for 72 per cent of the total non-performing loans.

Islami Bank, a private-sector bank, had the highest amount of NPLs. The bank had NPLs of Tk 98,914 crore, (Tk 989.14 billion) equivalent to 52.15 per cent of its total loans. Janata Bank, a state-owned bank, had the second-highest amount of NPLs, at Tk 75,728 crore (Tk 757.28), representing 75.05 per cent of its total outstanding loans.

The merged banks have the highest NPL ratios. Among them, 97.08 per cent of First Security Islami Bank’s loans, 96.78 per cent of union Bank’s loans, 78.15 per cent of Social Islami Bank’s loans, and 70.81 per cent of EXIM Bank’s loans are currently classified as non-performing.

At National Bank, 65.74 percent of loans are classified as non-performing, compared with 63.38 per cent at IFIC Bank and 56.4 percent at AB Bank. In addition, 43.98 per cent of the loans at state-owned Agrani Bank are now classified as non-performing.

Anis A Khan, former chairman of the Association of Bankers, Bangladesh (ABB) and former managing director of Mutual Trust Bank (MTB), spoke to Prothom Alo about the overall situation regarding non-performing loans in the country’s banking sector. In his view, “Despite the high level of NPLs in the banking sector, the banks that are performing well continue to follow good corporate-governance practices. Even a look at the composition of the boards of directors of these banks shows what they are like.

"Customers now take such factors into consideration when deciding where to deposit their money. At the same time, these banks have skilled bankers working with them. This is why their levels of non-performing loans are lower.”

The government has once again provided major import tax relief on almost all solar equipment used for renewable energy generation.

According to an order issued by the Internal Resources Division (IRD) of the finance ministry on 16 September, all solar equipment imported for industrial use will be subject to a 1% duty, with the existing 15% VAT and 2% advance tax waived.

For non-industrial commercial importers, almost all solar equipment and components will also be eligible for import at a 1% duty, except for a few components that are manufactured locally.

Import taxes on those components had previously ranged from 23% to 64%.

The facility will remain in effect for six months, according to the order signed by Ahsan Habib, acting secretary of the IRD and chairman of the National Board of Revenue (NBR).

An NBR statement said the measure would reduce the cost of solar power projects, accelerate the expansion of new power-generation capacity, reduce dependence on fossil fuels, and further strengthen the country's energy security and sustainable economic development.

The Executive Committee of the National Economic Council (ECNEC) has approved 12 major development projects with an estimated total expenditure of Tk 1.689 trillion.
The approval was finalized during an ECNEC meeting presided over by the Prime Minister and ECNEC Chairperson.

Meanwhile, the ECNEC endorsed MRT-5 south project while MRT-5 north and MRT-1 have been revised at the ECNEC meeting today (Wednesday).

Out of the total budget allocated for these 12 projects, BDT 482.56 billion will be sourced from internal government revenues, while Tk 1.22 trillion will be managed through external project loans and foreign assistance, and Tk 577.1 million from the agencies' own fund.

The approved projects consist of 7 entirely new initiatives and 5 revised projects.

Bangladesh Bank has instructed banks, mobile financial service (MFS) providers and other payment service providers (PSPs) to immediately suspend payment services to operators of mobile apps involved in unauthorised online lending.

The banking regulator also requested the Bangladesh Telecommunication Regulatory Commission (BTRC) and other relevant authorities to remove mobile apps involved in unauthorised online lending from online platforms, including the Google Play Store, and permanently stop their use and operation.

The central bank issued separate letters to those authorities recently.

BB also asked banks to take effective measures to raise public awareness against such apps and report the steps taken to its Payment Systems Supervision Department.

In the letter, BB said some mobile apps operating on online platforms are providing loans at high interest rates, exposing borrowers to financial losses and harassment.

It said such apps can gain access to users’ phone contacts, personal and sensitive information, photos, videos and text messages without their knowledge.

Borrowers who fail to repay loans may then face blackmail, threats to publish sensitive information and photographs on social media, and other forms of harassment, it added.

Citing Section 15(2) of the Payment and Settlement Systems Act, 2024, Bangladesh Bank said no person can operate an online or offline platform involving investment collection, lending, fund custody or financial transactions without its approval.

As the lending activities of the identified apps are being conducted without Bangladesh Bank approval, they are illegal and constitute a punishable offence under Section 37(1) of the law, it said.

The central bank warned that operators of such apps are directly involved in a punishable offence. It also said scheduled banks, MFS, digital financial service and payment service provider institutions that facilitate transactions related to such lending could be considered involved in the offence as financial transaction channels.

Under Section 19(4) of the law, Bangladesh Bank therefore directed all institutions and individuals concerned, including the operators of the identified apps listed in an attachment, to immediately stop providing payment services to them.

Earlier, the Bangladesh Financial Intelligence Unit warned the public against taking loans through unauthorised mobile apps and digital platforms and named 30 illegal apps involved in extortion, data theft and financial fraud.

The 30 unauthorised apps identified by the BFIU are: Sathi Loan, Pop Cash, FinCash, Quick Loan, Quick Taka, Dhaka Fin, LoanVibe, Dost Loan, Taka Cash Loan, KWANZA Loan, SSH Money, LoanBuddy, Cash-Hora, Alo Cash, Fast Loan, Easy Taka, Dhorjo Loan, Fin Dot Do, Taka Cash Loan, BongoCash, Asha Loan, Subidha Loan, Smart Loan BD, Online Loan BD, City Online Loan, BD Shohoj Loan, Cash Loan, Sonali, Loan Haat and Taka Nao.

Earlier, on August 24, The Daily Star published a report titled “Fake online loans lead borrowers into costly traps”.

The report said people are losing their hard-earned money to online scams that offer cheap loans and quick investment returns. It also said some unauthorised mobile apps are targeting people by offering digital loans.

Gas supply across the country has increased significantly following Prime Minister Tarique Rahman's directive, and the improvement is expected to continue in the coming days, said Prime Minister's Office (PMO) Spokesperson Mahdi Amin today (16 September).

"The implementation of what the prime minister said began within a very short time. Gas flow has increased significantly, and we can see visible improvement in the supply situation. InshaAllah, this positive trend will continue in the coming days," he said.

Mahdi made the remarks at a press conference at the PMO, marking seven months of the government led by Tarique Rahman.

He said the prime minister has recently held meetings with business leaders and the media personalities to address the gas supply crisis and directed the authorities to take the maximum possible steps to restore the situation based on reality and ensure that industries could resume normal operations.

"The objective was to ensure that industries become fully operational again and that Bangladesh's economy can continue on its potential and onward trajectory," the spokesperson said.

He said the government made "positive progress" in public welfare during its seven months in office, although it could not resolve all problems in such a short period.

Mahdi said the government is working with specific action plans and accountability, while tackling challenges ranging from foreign debt pressures and administrative reforms to corruption-free public services, education, healthcare and strengthening Bangladesh's position in diplomacy.

"From every step, the government's commitment to the country and its people is reflected," he said

The PMO spokesperson said the government is rebuilding Bangladesh from what he described as the "ruins" left after 17 years of the previous rule.

"It is difficult to solve all problems 100% within just seven months. But in the current elected and accountable government, whose only source of power is the people, the highest level of sincerity and goodwill is visible in every step," he said.

Mahdi called for unity beyond political and other differences to build a prosperous, self-reliant, humane, safe and people-oriented Bangladesh.

He said the government's measures over the past month could broadly be divided into seven areas: youth empowerment, education, information technology and innovation; overall public welfare and improvement of living standards; women's advancement, universal welfare and social protection; environment-friendly energy and climate-resilient industrialisation; modern health infrastructure and public health; transport infrastructure and traffic management; and institutional good governance, public diplomacy and foreign relations.

The spokesperson highlighted the approval of a new national pay scale for government employees, ranging from Tk20,000 to Tk1.56 lakh, as one of the measures taken to improve the financial well-being of public servants.

Other measures, he said, included extending institutional mobile allowances to government employees of all grades, increasing the maximum net pension of retired employees by up to 100% and providing a monthly allowance of Tk3,000 for their children with special needs.

Mahdi said the government also withdrew the requirement for prior Finance Division approval for recruitment and renewal of outsourced manpower to speed up official activities and took steps to prevent long-term postings of officials at the same workplace in the land administration sector.

He said the government passed legislation ensuring parents' lifetime possession and use of property even after transferring ownership through donation.

The spokesperson also mentioned initiatives to provide special national awards of Tk 1 lakh each to 100 meritorious teachers, increase grants to the Journalist Welfare Trust and expand programmes such as Family Card, Farmers' Card and regular government allowances for imams and muezzins.

On women's welfare, he said the government has taken an initiative to establish a joint institutional framework with an international cyber security network to prevent harassment and violence against women in cyberspace.

Mahdi said plans are also being formulated to provide universal stipends to all female students in primary and secondary educational institutions and ensure nutritious food at schools.

He said 20,000 tea workers in Sylhet, Moulvibazar and Habiganj will receive modern raincoats as part of measures to protect the health and safety of women working in the tea industry.

On the energy sector, the spokesperson said a programme to drill 150 new gas wells nationwide has begun as a medium-term measure to address the gas crisis, with another 150 wells planned in the next phase.

He said plans have been taken to increase the number of floating storage regasification units (FSRUs) from the existing two to five in phases, and efforts are underway to launch a third FSRU before 2028, if possible.

The government has also given in-principle approval to import 18 LNG cargoes through direct procurement from global suppliers, Mahdi said.

For long-term energy security, international financing of $1 billion has been secured for expansion of the Eastern Refinery in Chattogram, and work had begun, he said.

In the power sector, the spokesperson said 1,046.73 megawatts of electricity that remained suspended from the national grid due to technical problems have been restored.

He also highlighted plans for a 500MW power plant and a large fertiliser factory in Bhola, addition of 200MW of solar power to the national grid and a five-year plan to convert all diesel-powered irrigation pumps to solar energy.

Mahdi said the government has taken measures to ensure uninterrupted agricultural production, including maintaining a fertiliser stock of 5.155 million metric tonnes, 1.568 million tonnes above projected demand through February.

He said a central control room has also been planned to monitor fertiliser supply.

The spokesperson also mentioned the return to production of Chittagong Urea Fertiliser Limited after a six-month shutdown and initiatives to gradually reopen factories that had remained closed for various reasons.

In the health sector, he said the government plans to build 15-storey specialised general hospitals in Dhaka and the country's other eight divisional cities.

Mahdi said a policy decision has been taken to operate the newly built super-specialised hospital under a modern international corporate management model.

Plans are also underway to expand affordable dialysis services to every district and upazila and increase the number of beds at Bogura Shaheed Ziaur Rahman Medical College Hospital to 1,800, he said

The spokesperson mentioned the foundation-laying for an international-standard specialised burn and plastic surgery centre at Rangpur Medical College, plans for a national e-health platform and steps to restore the supply of essential medicines and modern medical equipment to community clinics.

He said 19.771 million children have been vaccinated against measles and rubella across the country over the past five months, exceeding the target.

Mahdi also referred to the government's three-month nationwide dengue prevention and cleanliness campaign, which began in the presence of the prime minister, as part of efforts to curb the spread of dengue.

He said a feasibility study and detailed design have been prepared for installing electric traction to operate electric trains on the Dhaka-Chattogram corridor.

Plans are also underway to construct a four-lane uninterrupted expressway from Dhaka to the City Gate in Chattogram and extend the Dhaka-Cox's Bazar intercity express train service, Mahdi said.

He also said the government directed the introduction of a fully cashless automated radio-frequency identification toll system within the next four months.

Among other measures, the spokesperson mentioned plans to relocate Karwan Bazar's wholesale kitchen market to Gabtoli and the Fulbaria bus terminal to Keraniganj to ease traffic congestion in Dhaka.

On governance, he said seven leaders of what he described as the "fascist organisation" have been sentenced to death by a court for genocide-related offences, while orders have also been issued to confiscate 50% of the movable and immovable property of five of those sentenced to death.

Mahdi said the government has also formally handed permanent appointment letters for government jobs to eligible members of 74 families of those killed in the July mass uprising.

He highlighted the formation of parliamentary standing committees, regular parliamentary oversight of ministries, the decision not to use honorific terms such as "Mahamanaya" or "Mananiya" before the president and prime minister in official documents, and the introduction of biometric attendance at land offices in phases.

Mahdi said the government has repaid $2.0476 billion, equivalent to Tk25,163 crore, in foreign loans and interest over the past five months.

He also cited a 13.1% increase in remittances over six months, initiatives to reopen the Malaysian labour market, progress in sending Bangladeshi workers legally to Italy and Oman, and progress in trade negotiations with the European Union.

The spokesperson said Bangladesh has successfully resolved 48 of 61 trade barriers identified by the EU.

He also mentioned a bilateral investment protection and promotion agreement with Hong Kong, financing of up to £2 billion under UK Export Finance for infrastructure development and procurement, and $1 million in emergency humanitarian assistance to Nepal following severe floods.

On defence and aviation, Mahdi said the government has begun the final process of procuring 20 J-10C fourth-generation fighter aircraft from China and is taking steps to equip the Border Guard Bangladesh with surveillance drones.

On fuel prices, the spokesperson said diesel is comparatively cheaper in Bangladesh than in many other countries, particularly neighbouring countries.

He said the government was providing a high level of subsidy on fuel to prevent additional pressure on the people.

At the briefing, Prime Minister's Press Secretary Saleh Shibly and Additional Press Secretary Atikur Rahman Ruman also highlighted various public welfare measures taken by Prime Minister Tarique Rahman.

PM's Speechwriter ASM Mahfuzur Rahman, Deputy Press Secretaries Jahidul Islam Rony and Md Suzauddhowla, Assistant Press Secretaries Md Nazmul Haque Khan, Abdullah Al Mahmud Shahriar,, Asrofa Emdad, Media Coordinator Tariqul Islam and PM's physician ANM Manowarul Kadir Bitu, among others, were present at the briefing.