Budget FY27: Govt to prioritise 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.
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.
















