FY26 budget offers no new move to restore public confidence in banks

The country's financial sector, particularly the banking industry, is going through one of its worst phases due to widespread irregularities and scams that took place during the tenure of the Awami League-led government.

Around a dozen banks are currently struggling to repay depositors, eroding public trust and deepening the confidence crisis in the banking system.

Not only depositors but shareholders of over 20 banks were also deprived of dividends this year, as the volume of bad loans reached an alarming level.

A significant number of banks incurred losses at the end of last year due to the surge in non-performing assets.

Against this backdrop, Salehuddin Ahmed, finance adviser to the interim government, presented the national budget for the fiscal year 2025–26 in a televised speech on Monday.

For the first time in the country's history, an interim government unveiled a national budget lower than that of the previous fiscal year, setting its size at Tk 7.90 lakh crore, 0.9 percent lower.

This year's budget speech was also shorter than those of previous years.

The FY26 budget speech included a chapter on good governance and institutional reform. In this section, the finance adviser highlighted the financial sector reforms initiated by the interim government following the political changeover on August 5 last year.

"During the last 15 years, the financial sector has been taken to the brink of a complete breakdown through unprecedented misgovernance," he said.

"Millions of crores of taka in bank deposits have been siphoned off. Against the backdrop of the political changes after August 5 last year, our government has undertaken important reforms to address long-standing structural challenges in the banking sector, establish good governance, and restore depositors' confidence," the budget speech read.

"As part of this, the boards of directors of several banks have been restructured."

The finance adviser also said that the Bank Resolution Ordinance 2025 has been promulgated to ensure the timely resolution of capital shortfalls, liquidity crises, bankruptcies, or existential threats to banks and to maintain financial stability.

He added that work is underway to amend the Bangladesh Bank Ordinance, 1972, and to enact the Weak Asset Management Law.

The adviser further highlighted the formation of three task forces, focused on the banking sector, the central bank, and the recovery of stolen money.

However, all these reform measures had already been disclosed by the interim government and the Bangladesh Bank before the budget announcement.

As a result, questions are now being raised about whether the Bank Resolution Ordinance and the task forces alone will be enough to restore public confidence in the banking sector.

Depositors are now demanding concrete and specific plans from the interim government about how they will be able to retrieve their money from troubled banks.

Lucky Gomes, a depositor at National Bank, recently visited the bank to withdraw her savings for an emergency but was unable to do so.

Bank officials told her she would not be able to access her funds until the next election, she told The Daily Star with visible frustration.

Like Lucky, thousands of depositors have been unable to recover their savings from a dozen banks and around 20 non-bank financial institutions (NBFIs).

At a recent press conference, Ahsan H. Mansur, governor of the central bank, said some Islamic banks would be merged initially and brought under the Bank Resolution Ordinance.

These banks would be temporarily nationalised. He assured that depositors' funds would remain safe during the transition, as the government would take over the management of the merged banks.

Even so, the FY26 budget speech offered no new measures or assurances to directly address the growing trust deficit among depositors.