Tk 40,000cr bank rescue fund proposed in FY27 budget

The government has proposed a Tk 40,000 crore financial package in the FY2026-27 budget to strengthen Bangladesh’s banking sector, as authorities move to address mounting challenges facing several financially distressed banks and non-bank financial institutions.

The allocation, included in the proposed national budget presented on Thursday, is aimed at restoring stability in parts of the financial system that have come under pressure from liquidity shortages, rising default loans and weakened capital positions.

Officials say the funds will be used to provide capital support and liquidity assistance to eligible institutions while helping safeguard depositors and maintain confidence in the banking sector.

The move comes at a time when concerns over the health of several commercial banks have intensified. Recent assessments have highlighted vulnerabilities within a number of institutions, particularly those struggling with high levels of non-performing loans and declining financial strength.

According to budget documents, the support programme is expected to be implemented in phases, with assistance directed toward banks and financial institutions identified as financially weak.

The government said the initiative is intended to prevent broader risks to the financial system and ensure the continued protection of depositors‍‍` funds.

However, access to the support package will not be unconditional. Authorities plan to link the financial assistance to a series of reform measures, including institutional restructuring, improved governance and stronger loan recovery efforts.

Economic analysts view the allocation as one of the largest government-backed efforts to stabilize Bangladesh’s banking sector in recent years, reflecting the scale of the challenges facing parts of the industry.

Officials hope the intervention will help strengthen financial stability, improve public confidence and create conditions for a healthier banking system in the years ahead.