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Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM) and a former chief economist of the Bangladesh Bank, said the negative capital adequacy ratio pointed to deep structural weaknesses in the sector.

“The latest figures indicate that the sector’s health has deteriorated further compared to previous years. The problems are becoming increasingly severe and harder to resolve,” said Mujeri.

He added that the scale of damage has built up over many years.

“If policymakers want to restore the banking sector to a healthy and sustainable position, there is no alternative to taking strong and decisive corrective measures,” said the former BB economist.

Meanwhile, Mutual Trust Bank CEO Rahman said the current government has taken office at a difficult time, with the financial sector’s weakness adding to its challenges.

“Therefore, the government must take the matter seriously. There appears to be no alternative to recapitalisation, but the government itself lacks the necessary funds.”

Recapitalisation refers to the process of injecting fresh capital into banks to restore their financial stability after losses. In practice, it usually involves government support or mergers between weak lenders.

In his budget speech last week, Finance Minister Amir Khosru Mahmud Chowdhury said that the government is spending around Tk 40,000 crore in the current fiscal year to recapitalise weak banks to restore discipline and stability in the banking sector.

He said Tk 20,000 crore of that amount was allocated to Sammilito Islami Bank, formed through the merger of five troubled lenders.

Rahman said broader structural reforms, including bank mergers and other resolution mechanisms, would be needed to stabilise the sector.

He pointed to Greece as an example of a country that faced a similar banking crisis but managed recovery through large-scale recapitalisation backed by the European Union.

Bangladesh, he added, does not have the same fiscal capacity.