Ecnec approves Tk1,276cr project to strengthen banking sector reforms

Highlights:

• Ecnec approved 13 projects worth Tk15,823.57cr, with Tk10,188.33cr from the government and Tk5,252.96cr in foreign loans.
• Hazrat Shahjalal International Airport expansion cost rises to Tk22,213cr in third revision.
• Other approvals include Patuakhali Medical College, digital land management, a Sonagazi solar plant and power-network expansion in the hill districts.

The Executive Committee of the National Economic Council (Ecnec) today (29 September) approved a Tk1,276 crore project to strengthen banking-sector supervision, improve financial-sector safety nets, upgrade Bangladesh Bank's technology and enhance the capacity for bank resolution and restructuring.

Bangladesh Bank will implement the Financial Sector Support Project-II from July 2026 to June 2031, financed mainly by the World Bank's International Development Association, according to the project document.

The project comes as Bangladesh's banking sector faces nearly 33% non-performing loans, weak governance, capital and liquidity pressures at some banks, and outdated technological infrastructure, according to the project document and Planning Commission observations.

The project will focus on financial-sector safety nets, bank resolution and restructuring, and reforms in state-owned banks.

It will also fund upgrades to Bangladesh Bank's information-technology infrastructure and supervisory capacity, including computer software, databases and other ICT equipment.

About Tk1,077 crore of the project budget is allocated to capital expenditure, including Tk712 crore for ICT equipment and Tk355 crore for computer software, according to the project cost breakdown.

The project also includes training and consultancy services to build institutional capacity.

Performance-based conditions will be introduced to strengthen financial-sector safety nets, enhance the capacity of the Deposit Insurance Trust Fund, improve bank resolution and restructuring operations, and strengthen governance in state-owned banks.

The project document says weaknesses in banking-sector supervision, including inadequate integrated information systems, have made it harder to address emerging risks such as cyberattacks and cross-border financial activities.

The project will also seek to reduce the time required for payments to depositors and improve the implementation of bank resolution and restructuring.

The Planning Commission said the project would help address the banking sector's current challenges and enhance financial stability and depositors' confidence.

The project is a follow-up to an earlier Financial Sector Support Project implemented by Bangladesh Bank.

13 projects worth Tk15,823.57cr approved

At today's meeting, Ecnec approved 13 projects involving a total expenditure of Tk15,823.57 crore.

Of the total, Tk10,188.33 crore will come from the government, Tk5,252.96 crore from foreign loans, and Tk451 crore from agencies' own funds.

The meeting also approved a third revision to the Hazrat Shahjalal International Airport expansion project, raising its cost to Tk22,213 crore from Tk21,365.51 crore under the second revision.

The project was originally approved in 2016 at an estimated cost of Tk847.57 crore.

The latest increase was mainly due to additional maintenance costs, the inclusion of new works, and higher price adjustments under contractual provisions, according to the project proposal.

Other projects approved at the meeting include the Integrated Health System Response to Fight Against TB, HIV/AIDS and Malaria in Bangladesh project and the first revised project for establishing Patuakhali Medical College and Hospital.

Ecnec also approved a project to develop and expand existing physical disability training centres in the Chattogram, Khulna and Rajshahi divisions, and to expand the hostel building and capacity of the institution for children with intellectual disabilities at Chattogram's Roufabad.

Two water-resources projects were approved: one for integrated flood and river management and drainage improvement in the Bamni River Basin, including construction of the Musapur Regulator; and another to protect Shibpur, Dhania and Medua areas of Bhola Sadar and Daulatkhan upazilas from erosion by the Meghna River.

The meeting also approved the second revised project for establishing digital land-management systems through digital land surveys in three city corporations, one municipality and two rural upazilas.

Other approved projects include the third revised rural infrastructure development project in Madaripur, Shariatpur and Rajbari districts; the second revised project to enhance the technical and technological capabilities of the Special Response Battalion; land acquisition for a solar power plant in Sonagazi, Feni; and expansion of the electricity network in the three hill districts.

Prime Minister Tarique Rahman chaired the Ecnec meeting at the Bangladesh Secretariat.