The banking sector in the country is still reeling from a deep crisis, with no new efforts to fix the shattered trust in the latest FY26 budget. Despite growing alarm over bad loans and shaky bank finances, the government’s budget announcement left many feeling disappointed and worried.
A Troubling Backdrop: Banks Struggling on Multiple Fronts
It’s hard to overstate how rough the situation has become for banks lately. A dozen or so banks are barely managing to pay back depositors, shaking the very foundation of public trust. Imagine putting your hard-earned money in a bank and not being sure if you’ll ever see it again. That’s the reality for many right now.
On top of that, shareholders of more than 20 banks were left empty-handed this year—no dividends, no profits. Why? Because bad loans have exploded to scary levels. These non-performing assets (NPAs) are like financial black holes, sucking the life out of banks’ balance sheets.
Many banks ended FY25 with losses, marking a steep decline in the financial health of the sector. The surge in bad debts is eating into profits and draining capital. This isn’t just a banking problem; it’s a blow to the whole economy.
Budget 2025-26: A Lackluster Response to a Deepening Crisis
Then came the budget announcement on Monday, delivered by Salehuddin Ahmed, finance adviser to the interim government. The highlight? A national budget size of Tk 7.90 lakh crore—a rare cut, down 0.9 percent from the previous year.
That’s historic, alright—but not in a good way. For the first time, an interim government has unveiled a smaller budget than before. The speech itself was noticeably shorter, almost like a whisper compared to previous years’ more detailed addresses.
There was a chapter on good governance and institutional reform, which briefly touched on the banking sector. Ahmed acknowledged the mess, saying the financial system had been “taken to the brink of a complete breakdown” over the past 15 years. That’s a blunt way to put it.
The budget speech mentioned reforms launched after the political shift in August last year, aiming to fix structural problems and restore confidence. But the big question remains—where’s the real action?
Reforms in Words, Not in Deeds?
The budget talks about fighting “unprecedented misgovernance” and recovering “millions of crores” siphoned off from banks. Yet, it falls short on concrete new measures to directly tackle the trust crisis gripping depositors and investors.
The interim government’s promise to clean up the mess feels like a band-aid on a deep wound. People want to see clear, tough steps—better regulation, stronger oversight, speedy resolution of bad loans—not just hopeful words.
Without decisive moves, the banking system risks staying stuck in limbo. Depositors remain anxious, shareholders remain wary, and banks continue to bleed.
What the Numbers Say: A Sector on Edge
Here’s a quick snapshot of what’s really going on, according to recent reports:
| Indicator | Status |
|---|---|
| Number of banks struggling | Around 12 |
| Banks denying dividends | More than 20 |
| Bad loans (NPAs) | Surged to alarming levels |
| Banks reporting losses in FY25 | Significant |
| Budget size FY26 | Tk 7.90 lakh crore (down 0.9%) |
The figures tell a grim story. The finance ministry’s focus on “good governance” is a start, but banks need more than words. They need bold reforms that restore stability and confidence.
The Road Ahead: Will Trust Ever Return?
Can the sector bounce back? Possibly. But it won’t happen overnight or without clear commitment. The FY26 budget missed a chance to send a strong signal of change.
Depositors, investors, and the general public are watching closely. The interim government says it’s on the case, but so far, it feels like business as usual—just with a smaller budget and a shorter speech.
One hopes that behind the scenes, more aggressive reforms are brewing. Because banking confidence isn’t just about money—it’s about faith. And once that faith is broken, it takes serious effort to rebuild.
