The World Bank’s Board of Executive Directors has approved USD 450 million for Bangladesh under the Financial Sector Support Project II to reinforce core banking sector safeguards and supervisory capacity. The financing is intended to strengthen the deposit protection system for small depositors, build Bangladesh Bank’s supervision systems, and lay the groundwork for bank resolution and state-owned bank reform. The project will increase the capital of the deposit protection fund and support reforms to enhance deposit protection, establish an Emergency Liquidity Assistance framework, develop bank restructuring strategies, and advance changes in state-owned banks. It will also modernize Bangladesh Bank’s information and communications technology infrastructure to address cybersecurity risks and close gaps in sector-wide data and analytics, with the aim of improving risk monitoring and data-driven, risk-based supervision. The World Bank framed the support against acute sector stress, noting that the non-performing loan ratio reached 32.6 percent at the end of March 2026 and the system-wide capital-to-risk-weighted assets ratio was negative 2.6 percent at the end of December 2025. The project forms part of a coordinated approach with development partners including the International Monetary Fund and the Asian Development Bank to strengthen crisis preparedness and the authorities’ capacity to manage banking sector stress.

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