Published: 10:31 AM, 16 August 2026
ADB, Bangladesh Bank map out banking sector reforms
Asian Development Bank (ADB) Vice President for South, Central and West Asia Yingming Yang met Bangladesh Bank Governor Mostaqur Rahman on Thursday to discuss banking sector reforms, bank restructuring and recapitalisation, with a focus on building a more stable and resilient financial system.
The meeting also explored potential ADB support for strengthening financial sector stability and institutional capacity.
Bangladesh Bank Deputy Governors Md Habibur Rahman and Dr Md Kabir Ahmed, along with senior officials from the Financial Sector Support and Strategic Planning Department (FSSSPD), attended the meeting.
The discussions covered ongoing reforms in the banking sector, restructuring and recapitalisation of banks, and measures to improve the overall capacity and stability of the financial system.
The governor reaffirmed the central bank’s commitment to carrying out necessary reforms in the banking sector and the wider financial system. Yingming Yang welcomed the commitment and expressed ADB’s interest in continuing its cooperation and support for Bangladesh’s reform efforts. Both sides also agreed to strengthen cooperation to help build a stronger, more stable and sustainable financial sector.
The meeting comes at a difficult time for Bangladesh’s banks. Bangladesh Bank’s Financial Stability Report shows that total distressed loans "including defaulted, rescheduled and written-off loans" reached Tk 10.87 lakh crore at the end of 2025. This was equal to about 59 per cent of all outstanding bank loans.
The banking sector is also facing a serious shortage of capital. The overall capital-to-risk-weighted assets ratio fell to negative 2.64 per cent at the end of 2025, showing how badly the financial condition of many banks has weakened.
Bangladesh Bank has therefore made reducing bad loans one of its main priorities.
It has announced an 18-month plan that includes faster loan recovery, legal reforms and the creation of asset management companies to take troubled loans off banks’ balance sheets.
The central bank is also moving towards the Expected Credit Loss system under IFRS 9, which is expected to be fully implemented in 2027. The system is designed to make banks recognise possible loan losses earlier instead of waiting until loans become seriously problematic.
The government has also identified recapitalisation of troubled banks as a major priority for the 2026-27 fiscal year.
Around Tk 40,000 crore has already been allocated for recapitalising distressed banks, while a risk-based system for supervising weak banks is also planned.
This is important because several banks do not have enough capital to absorb their losses and continue normal lending. ADB has been supporting Bangladesh’s banking-sector reform programme for some time. In June 2025, the development lender approved a $500 million policy-based loan aimed at improving bank supervision, corporate governance, asset quality and financial stability.
The government and ADB have identified an annual ADB pipeline of more than $1 billion aligned with the IGND initiative and initiated investment promotion consultations with private sector representatives, reveals the press release.
“Bangladesh is entering an important phase of its development journey, with a growing need to strengthen competitiveness, mobilize private investment, and build resilience,” said Yang.
Discussions during this visit reaffirmed the strength of the ADB–Bangladesh partnership and underscored the importance of translating strategic commitments into sequenced reforms, bankable investments, and effective implementation, he said.
During his visit, Yang met senior policymakers and government officials, including finance and planning minister Amir Khosru Mahmud Chowdhury; power, energy and mineral resources minister Iqbal Hassan Mahmood; the prime minister’s adviser on finance and planning, Rashed Al Mahmud Titumir; and Bangladesh Bank governor Md Mostaqur Rahman.
