Budget FY27: Govt to prioritise recapitalisation of distressed banks
The government has already allocated around Tk40,000 crore in the current fiscal year for the recapitalisation of distressed banks.
The government will prioritise the recapitalisation of distressed banks as a key medium-term measure to support economic recovery and sustain investment flows in the FY2026-27 budget.
According to the proposed budget document, a risk-based supervisory framework will be introduced to strengthen oversight of weak banks. Where necessary, recapitalisation and management restructuring measures will be implemented.
The government has already allocated around Tk40,000 crore in the current fiscal year for the recapitalisation of distressed banks.
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Capital shortfall rises sharply
A central bank report showed that the total capital shortfall of 20 banks stood at Tk2.78 lakh crore at the end of the December 2025 quarter, slightly lower than the previous quarter. The decline was mainly attributed to policy support from the Bangladesh Bank on loan rescheduling.
The report also found that the sector's capital-to-risk-weighted assets ratio (CRAR), a key indicator of financial strength, fell to negative 2.64% at the end of December. International regulatory standards require banks to maintain a minimum CRAR of 12.5%.
Governance reforms and oversight measures
The budget document said efforts to restore discipline in the financial sector include measures to reduce political interference in banking operations.
It added that legal amendments have been introduced to limit undue influence and strengthen institutional independence.
Steps are also being taken to reduce non-performing loans (NPLs), improve transparency in loan approval and rescheduling processes, and enhance accountability in bank management.
Bank resolution and recovery initiatives
A bank resolution and restructuring initiative has been launched to safeguard depositors' funds and ensure timely repayment.
The government is also working to recover funds allegedly transferred abroad illegally, according to the budget document.
It further said that international standards in risk management, capital adequacy and corporate governance will be adopted to ensure long-term stability, resilience and competitiveness in the banking sector.
Financial inclusion programmes will also be expanded to improve access to finance for women, young entrepreneurs and marginalised communities.
