World Bank Approves $450 Million to Strengthen Bangladesh's Banking Sector

The World Bank has approved $450 million in financing to strengthen the foundation of Bangladesh's banking sector, revive economic growth, and boost job creation. The executive board of directors authorized the funding under the "Financial Sector Support Project-II," according to an official press release issued on Wednesday (June 24).

The project is specifically designed to safeguard small depositors by bolstering the country's deposit protection framework and enhancing the supervisory and oversight capabilities of Bangladesh Bank.

The financial injection comes at a critical time when the country's banking system, which holds nearly 90% of the financial sector's total assets, faces severe systemic stress. According to the multilateral lender's data, Bangladesh's non-performing loans (NPLs) surged to 32.6% at the end of March 2026, significantly eclipsing South Asia's regional banking average of 7.9%. Furthermore, the capital-to-risk-weighted assets ratio within the banking industry plummeted to a negative 2.6% as of December 2025. This newly approved project aims to pave the way for state-owned bank restructuring, increase the capital base of the Deposit Protection Fund, establish a robust emergency liquidity framework, and formulate efficient bank resolution strategies.

Jean Pesme, World Bank World Bank Division Director for Bangladesh and Bhutan, emphasized that a stable and inclusive financial sector is paramount for Bangladesh to achieve its aspiration of becoming a $1 trillion economy. He noted that the initiative will build the necessary infrastructure and security networks to restore public trust in banks. Additionally, the funding will modernize Bangladesh Bank's information and communication technology (ICT) infrastructure to mitigate escalating cyber security threats and bridge critical data gaps. Toshiaki Ono, Senior Financial Sector Specialist and Task Team Leader for the project, stated that the operation aligns with ongoing efforts by the IMF and the Asian Development Bank (ADB) to equip local authorities to manage systemic stress and prevent future financial crises.