Bangladesh has signed a $450 million financing agreement with the World Bank's International Development Association (IDA) to implement the Financial Sector Support Project II, The Business Standard reported on Saturday, citing a press release from the Economic Relations Division (ERD). ERD Secretary Md Shahriar Kader Siddiky and World Bank Division Director for Bangladesh and Bhutan Jean Pesme signed the agreement on Friday, October 30.

Source: The Business Standard (Oct 31, 2026)

The $450 million — yaani $0.45 billion, denominated as 328 million Special Drawing Rights and worth about Tk 5,580 crore at the Tk 124-per-dollar rate used in the financing announcement — will run from July 1, 2026 to June 30, 2031. The Bangladesh Bank will implement the project under the Financial Institutions Division of the finance ministry. The signing follows the World Bank Board's approval of the loan in June, and it is the follow-through on one part of the much larger package Dhaka sought from the Bank in October — $3.77 billion in project financing and budget support for LNG imports, food security and financial-sector reform, as Awaaz Punjab reported at the time.

$450 millionIDA financing signed on Oct 30 (yaani $0.45 billion; 328 million SDR)
1.5% a yearinterest on the withdrawn credit balance
25 yearsmaturity, including a 5-year grace period
32%+share of bad (non-performing) loans in total bank lending

What the money is meant to fix

According to the ERD and the World Bank's June release, the project aims to strengthen the financial sector safety net, enhance supervisory capacity and support banking sector restructuring. In practice that means strengthening the deposit protection system to safeguard small depositors and increasing the capital of the deposit protection fund, building the Bangladesh Bank's supervisory capacity and systems, establishing an effective Emergency Liquidity Assistance framework, developing bank resolution and restructuring strategies, and supporting reforms in state-owned banks.

Why the sector needs it

The World Bank has said Bangladesh's banking sector faces significant challenges caused by weak corporate governance, regulatory capture and related-party lending. A World Bank assessment put non-performing loans at 32.6 percent of total bank lending at the end of March 2026, compared with a South Asian average of 7.9 percent. Speaking in Dhaka on Saturday, National Professor Mahbub Ullah said bad loans now exceeding 32 percent of total loans are disrupting loan recovery and reinvestment and putting pressure on bank profitability, capital adequacy and fresh lending.

The terms, in plain language

The loan carries 1.5 percent annual interest on money actually withdrawn, and a maximum commitment fee of up to 0.50 percent a year on the undrawn balance — though the ERD noted the World Bank has waived the commitment fee for Bangladesh for many years, including the current fiscal year. Repayment runs over 25 years, with nothing due in the first five.