ADB approves $900m in loans to support Bangladesh's banking reforms, climate resilience
Of the amount, $500 million will go towards stabilising and reforming the banking system, while $400 million will support efforts to build climate resilience, reduce emissions, and promote inclusive development
The Asian Development Bank (ADB) has approved a total of $900 million in policy-based loans to Bangladesh, aimed at strengthening the country's banking sector and enhancing resilience to climate change. Of the amount, $500 million will go towards stabilising and reforming the banking system, while $400 million will support efforts to build climate resilience, reduce emissions, and promote inclusive development.
The Stabilising and Reforming the Banking Sector Program, Subprogram 1 will focus on policy reforms to promote finance sector resilience by enhancing banking sector governance, increasing the effectiveness of Bangladesh Bank's liquidity management framework, and introducing immediate measures to resolve significant nonperforming loans in the banking system, according to a press release.
The measures under the programme will support phased compliance with international banking norms, leading to integrity in asset quality information.
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The press release said that Bangladesh needs effective financial intermediation which can help business enterprises access credit and individuals obtain financial services from the banking sector.
The banking sector has traditionally focused on industrial segments and creditworthy borrowers, with large sections of the population depending primarily on microfinance institutions.
Strengthening the banking sector, including digital infrastructure, will help provide longer-term financing sources and enable greater and cost-effective financial inclusion.
ADB Principal Financial Sector Specialist Sanjeev Kaushik said the key binding constraints in the banking sector include a lack of robust asset quality, tight liquidity, and inadequate financial intermediation leading to low rates of financial inclusion.
"The programme will bring significant value addition through building the regulator's capacity for ensuring compliance with international norms, augmenting the capitalization of the banking sector and improving access to affordable finance for micro, small and medium enterprises."
ADB okays $400m loan to boost Bangladesh's climate resilience, inclusive development
The Asian Development Bank (ADB) on Thursday approved a $400 million loan to help Bangladesh enhance its resilience against climate impacts, cut emissions in climate-critical sectors, and promote inclusive development.
The funding will support the second phase of the Climate-Resilient Inclusive Development Program (CRIDP), which includes nearly $113 million in cofinancing from the Agence Francaise de Developpement, and $400 million from the Asian Infrastructure Investment Bank (AIIB), according to a press release.
It said that Under CRIDP, the Bangladesh Climate Development Partnership will be established to secure climate finance and help government ministries to develop, implement, monitor and evaluate climate projects more effectively.
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A new framework will scale up local youth-related and gender-responsive local adaptation measures.
The programme also supports a national disaster risk financing strategy, including instruments like crop insurance, disaster risk insurance, and contingent disaster financing.
Besides, the programme supports the update of the Revised Strategic Transport Masterplan for Dhaka (2025–2034), and implementation monitoring of the renewable energy components of the Integrated Energy and Power Master Plan, which aims to promote climate-friendly transport systems and renewable energy.
Bangladesh is one of the world's most climate-vulnerable nations, said the press release.
Recent studies show that if high greenhouse gas emissions continue, the country could lose up to one-third of its gross domestic product (GDP) by 2070.
Tropical cyclones already cause about $1 billion or 0.7% of GDP in damages each year, and severe flooding could shrink the economy by as much as 9% compared to expected growth by 2050.
By that year, Bangladesh could lose 17% of its land and 30% of its food production, pushing food and nutrition security to a critical point.
The programme addresses key constraints such as the lack of a holistic and effective institutional framework, as well as inadequate climate financing and private sector participation.
It focuses on creating a supportive environment for climate actions, strengthening adaptation, and accelerating mitigation actions.
ADB Senior Public Sector Economist Sameer Khatiwada said the programme will help Bangladesh achieve its climate goals more efficiently by bringing government agencies together and aligning their work with national policies.
"It will also remove obstacles to mobilising climate finance, reinforce adaptation efforts in priority sectors, and speed up actions to reduce climate impacts."
