Dhaka:The government has approved a Tk 1,276.30 crore project to enhance the supervision of banks by Bangladesh Bank through upgraded digital systems, improve financial-sector safeguards, and support reforms to address non-performing loans, capital shortages, and other systemic risks.
According to United News of Bangladesh, the Financial Sector Support Project-II (FSSP-II) will be implemented by Bangladesh Bank under the Financial Institutions Division of the Ministry of Finance from July 2026 to June 2031. The Executive Committee of the National Economic Council (ECNEC) approved the project during a meeting chaired by Prime Minister Tarique Rahman.
The project will be primarily financed by the World Bank's International Development Association (IDA), contributing Tk 1,261.54 crore, with the remaining Tk 14.76 crore coming from Bangladesh Bank's own resources. The World Bank's financing aims to strengthen Bangladesh Bank's supervisory capacity, modernize its ICT infrastructure, and improve the deposit protection system, laying the groundwork for bank resolution and restructuring.
State Minister for Planning Zonayed Abdur Rahim Saki highlighted the project's aim to address serious issues in the banking sector, such as high non-performing loans, capital shortages, negative capital in some banks, and cyber risks. The initiative seeks to establish a continuous digital monitoring and supervision system to quickly detect irregularities and emerging risks.
The FSSP-II will integrate with other government digitization initiatives to improve interoperability and data sharing. A committee has been formed to work on interoperability among several government projects, which include collaborations with the Planning Ministry, Finance Ministry, National Board of Revenue, and the Comptroller and Auditor General's office.
The project will also focus on modernizing Bangladesh Bank's ICT infrastructure to counter rising cybersecurity risks and enable data-driven, risk-based supervision. It aims to strengthen the financial-sector safety net through performance-based conditions and enhance the financial capacity of the Deposit Insurance Trust Fund, while also improving bank resolution and restructuring efforts.
Reforming state-owned banks to improve their governance and financial stability is among the project's objectives. The World Bank noted that at the end of March 2026, the banking sector's non-performing loan ratio was 32.6 percent, with a system-wide capital-to-risk-weighted-assets ratio of negative 2.6 percent at the end of December 2025.