Bangladesh is receiving a World Bank loan worth US$450 million meant for strengthening the country's financial sector struggling for revival with better footprint in the economic activities, the global lender says.
The Board of Executive Directors of the Washington-based lender approved the loan early Wednesday (Bangladesh time), said the World Bank Dhaka office in a statement later in the day.
Under the Financial Sector Support Project II, Bangladesh will work to bolster the deposit-protection system to protect small depositors and build Bangladesh Bank's supervisory capacity and systems.
"It lays the groundwork for bank resolution and reform of state-owned banks. It will also support the deposit-protection fund by increasing its capital and advance key reform priorities, including enhancing the deposit-protection system, establishing an effective Emergency Liquidity Assistance framework, developing bank-restructuring strategies, and supporting reforms in state-owned banks," says the WB release.
The banking sector faces significant challenges caused by weak corporate governance, regulatory capture, and related-party lending.
The non-performing loan (NPL) ratio stood at 32.6 per cent as of the end of March 2026, well above the average for South Asian banks of 7.9 per cent, and the system-wide capital-to-risk-weighted-assets ratio was negative 2.6 per cent as of the end of December 2025.
Jean Pesme, World Bank Division Director for Bangladesh and Bhutan, has said: "Bangladesh's vision of attaining a trillion-dollar economy requires a stable and inclusive financial sector. But the banking sector -- which accounts for about 90 per cent of total financial-sector assets -- faces mounting stress."
He hopes this project will help Bangladesh put in place a set of essential tools, systems, and safeguards needed to protect small depositors and support confidence, restore stability in the banking sector, allowing it to support economic growth and job creation.
It is also meant to upgrade and modernise Bangladesh Bank's ICT infrastructure, helping address rising cybersecurity risks, and close critical gaps in sector-wide data and analytics.
The development financier also hopes the funding will help enhance the central bank's ability to monitor risks, enhance data-driven and risk-based supervision, and improve the resilience of the financial sector.
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