The World Bank has approved $450 million in financing to make Bangladesh's banking sector more stable, accountable and strong.
The organization says that a strong banking sector is essential for economic growth and job creation, and this assistance is being provided for that purpose.
In a statement released from Washington on Wednesday (June 24), the World Bank said that its board of directors approved $450 million in financing under the 'Financial Sector Support Project-2'.
The project will strengthen the deposit protection system, ensure the protection of small depositors, and help develop the supervisory capacity and technical infrastructure of Bangladesh Bank.
In addition, the project will also help lay the foundation for bank restructuring, bank resolution and state-owned bank reform.
The World Bank said that the country's banking sector has long faced challenges due to weak corporate governance, influence over regulators and a tendency to lend to related parties.
The non-performing loan ratio stood at 32.6% at the end of March this year, which is much higher than the average of 7.9% for South Asian banks.
In addition, the banking sector's risk-adjusted capital ratio (Capital-to-Risk Weighted Assets Ratio) was negative 2.6% at the end of December 2025.
Jean Pesme, director of the World Bank's Bangladesh and Bhutan Department, said: "Bangladesh needs a stable and inclusive financial sector to develop into a trillion-dollar economy. But the banking sector, which holds about 90% of the country's total financial sector assets, is currently under severe pressure."
This project will help build the necessary policy and institutional capacity to protect small depositors, restore confidence in the banking system, and restore stability to the sector. As a result, the banking sector will be able to play a more effective role in economic growth and job creation, he added.
The project will modernize Bangladesh Bank’s information and communication technology (ICT) infrastructure. The World Bank believes that this will help address cybersecurity risks, improve data management in the financial sector, and strengthen risk-based supervision.
Toshiaki Ono, senior financial sector specialist at the World Bank and project task team leader, said: “As part of a coordinated initiative by various development partners, including the IMF and the Asian Development Bank, this project will strengthen the banking sector’s preparedness to deal with potential crises and help build the capacity of relevant authorities.”
The World Bank believes that if the proposed reforms are implemented, the risks in the banking sector will be reduced, depositor protection will increase, and the stability of the country’s financial system will be further strengthened.
