Bangladesh has signed a $450 million financing agreement with the World Bank to strengthen the country's financial sector safety net, enhance supervisory capacity and support restructuring of the banking sector.
The financing agreement under the 'Financial Sector Support Project II' was signed between the Government of Bangladesh and the International Development Association (IDA), the World Bank's concessional lending arm, on October 30.
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) or equivalent to $450 million and will run from July 1, 2026, to June 30, 2031.
The 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, improve the supervisory capacity of the financial sector authorities and support restructuring of the banking sector.
Under the financing terms, the loan carries an annual interest rate of 1.5% on the withdrawn credit balance, alongside a maximum commitment fee of 0.50% per annum on the undisbursed financing balance, though the fee is waived for FY27.
The financing features a maturity period of 25 years, including a five-year grace period.
The ERD noted that the World Bank remains Bangladesh's largest multilateral development partner, supporting various economic and social development initiatives.
Why it matters
The $450 million World Bank financing directly supports structural reforms and supervisory enhancement within Bangladesh's financial sector.