Bangladesh to borrow $450m from WB for banking reforms

Bangladesh will receive US$450 million in World Bank financing to strengthen financial sector oversight, improve the banking safety net and support reforms aimed at restructuring the country’s banking sector.
The financing agreement under the Financial Sector Support Project II was signed between the government and the International Development Association (IDA), the World Bank’s concessional lending arm, on 30 October.
Economic Relations Division (ERD) Secretary Md Shahriar Kader Siddiky and World Bank Division Director for Bangladesh and Bhutan Jean Pesme signed the agreement on behalf of their respective sides.
The project will receive 328 million Special Drawing Rights (SDR), equivalent to $450 million, and will run from 1 July 2026, to 30 June 2031. Bangladesh Bank will implement the project under the supervision of the Financial Institutions Division (FID) of the Ministry of Finance.

The project aims to strengthen the financial sector safety net, enhance the supervisory capacity of financial sector authorities and support the restructuring of the banking sector.
Under the financing terms, the loan carries an annual interest rate of 1.5% on the withdrawn credit balance. It also includes a maximum commitment fee of 0.50% a year on the undisbursed financing balance.
However, the World Bank has waived the commitment fee for Bangladesh for many years, including the current fiscal year, according to an ERD press release.
The financing has a maturity period of 25 years, including a five-year grace period.
The ERD said the World Bank remains Bangladesh’s largest multilateral development partner, providing financing for various areas, including economic and social development, institutional reforms, infrastructure development and the energy sector. The latest agreement marks another step in Bangladesh’s cooperation with the World Bank to strengthen the country’s financial sector and institutional capacity.

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