Govt spends Tk 400b in FY26 to rescue banks

Khosru outlines banking reforms as authorities move to restore financial stability

FE Team | Published: June 13, 2026 21:36:02

FE REPORT
The government is spending more than Tk 400 billion this fiscal year (FY2025-26) to recapitalise weak banks, underscoring the scale of challenges facing the financial sector as it seeks to restore stability, improve governance and rebuild depositor confidence.
Finance Minister Amir Khosru Mahmud Chowdhury disclosed the figure while presenting the national budget in parliament on Thursday.
He said restoring discipline in the banking and financial sectors and rebuilding public confidence in these institutions constitute key medium-term priorities for supporting economic recovery and sustaining investment flows.
To achieve these objectives, the government is undertaking measures to reduce non-performing loans, enhance transparency in loan approval and rescheduling processes, and strengthen accountability in bank management and governance.
The minister said a risk-based supervisory framework would be introduced to restore the financial soundness of weak banks, while recapitalisation and management reform measures would be implemented where necessary.
"It is worth noting that the government is having to spend more than Tk 400 billion in the current fiscal year for the recapitalisation of banks," he said.
To improve the effectiveness of policy implementation in the financial sector, he said, the government would strengthen the supervisory authority of the central bank, introduce the necessary legal reforms to eliminate political interference in banking operations, and ensure that bank governance is free from undue family influence.
International standards relating to risk management, capital adequacy and corporate governance would be adopted to enable financial institutions to become more stable, resilient and competitive over the long term.
At the same time, greater use of technology would be encouraged to promote digital finance, fintech solutions and innovative financial services across the economy.
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