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WB, ADB to lend $1.75b for banking sector reform

Published : Thursday, 12 September, 2024 at 12:00 AM  Count : 323
 

For the country's banking sector reform, the World Bank (WB) and the Asian Development Bank (ADB) are going to lend US$ 1.75 billion to Bangladesh government to execute the programmes.

This loan will also be spent on modernization and capacity building of Bangladesh Bank (BB). The central bank is also undertaking a new project in this regard and the International Monetary Fund (IMF) will contribute to this project, Bangladesh Bank sources said.

According to BB sources discussion about a WB loan of $400 million has already started but in view of the current situation discussion to increase the loan amount to $450 million is going on. 

ADB has shown interest in lending $1.3 billion for banking sector reform. The central bank has also started discussions on whether this loan can be used for recapitalization of weak banks.

The country's banking system has become fragile under Sheikh Hasina regime. At least 10 banks are in critical condition and the interim government is emphasizing reforms of those banks.
 
Bangladesh Bank governor Ahsan H Mansur, who took over recently reconstituted the board of directors of those 10 banks and one financial institution. Nine such banks were grabbed by S Alam Group which has taken out about Tk 2 lakh crore from these banks illegally.  

The new board is worried about recovering this huge amount of money. In this situation, these banks are in extreme liquidity crisis.

The sources said instead of setting up a commission on banking reform, the government is planning to quickly set up three task forces to fix their problems. 

Setting up a commission will take a long time; therefore Bangladesh Bank wants to start the reforms soon through these task forces. 



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