MD MEHEDI HASAN

The proposed FY2026–27 budget presents a stark assessment of the financial sector’s long-running weaknesses but offers limited detail on how the BNP-led government plans to reform it.

Finance Minister Amir Khosru Mahmud Chowdhury yesterday placed his maiden national budget, proposing a Tk 9.38 lakh crore outlay for FY2026–27.

In his budget speech, the minister described a financial sector weakened by years of irregularities, politically influenced lending, weak oversight, opaque lending practices, misuse of loan rescheduling facilities, and the concealment of bad loans.

“The financial sector we have inherited is a matter of serious national concern,” he said.

According to the minister, the banking sector’s non-performing loan (NPL) ratio stood at 13.6 percent of total loans in December 2005 but surged to 35.73 percent by the first quarter of FY2025–26, equivalent to more than Tk 6.44 lakh crore.

He said the deterioration has left several banks facing acute liquidity shortages, eroded public confidence, and, in some cases, required emergency intervention and institutional consolidation.

The minister also highlighted weakening capital strength, noting that the capital adequacy ratio (CAR), which stood at 7.3 percent in 2005, had fallen to negative 2.64 percent by the end of 2025.

He said these developments have undermined trust in the banking system and made it difficult for ordinary depositors to access their savings on time.

After the fall of the Awami League-led government in August 2024 through a mass uprising, the full extent of the sector’s problems became visible.

The interim government and Bangladesh Bank subsequently launched a series of reform initiatives, including amendments to financial sector laws.

These included enactment of the Bank Resolution Ordinance and the Deposit Insurance Ordinance, alongside efforts to amend the Bangladesh Bank Order, 1972, the Bank Company Act, and the Money Loan Court Act. Other measures included removing the Financial Institutions Division from the finance ministry.

However, those initiatives were largely absent from the current budget speech.

Instead, the finance minister said the government is spending around

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