World Bank to provide $450 million loan for Bangladesh financial sector reforms

The World Bank, through the International Development Association (IDA), has signed a $450 million loan agreement with Bangladesh to strengthen the country's financial sector. The funding, provided as 328 million Special Drawing Rights (SDR), is intended for the “Financial Sector Support-2” project.

The project is scheduled to run for five years, from July 1, 2026, to June 30, 2031, with Bangladesh Bank serving as the primary implementing agency. Key objectives include enhancing the supervision capabilities of Bangladesh Bank through improved ICT infrastructure, increasing the financial capacity of the Deposit Insurance Trust Fund (DITF) to protect depositors, and assisting in the restructuring of troubled banks.

The loan terms include an annual interest rate of 1.5 percent and a maximum commitment fee of 0.5 percent on undrawn amounts. The repayment period spans 25 years, which includes a five-year grace period. The agreement was signed by ERD Secretary Md. Shahriar Kader Siddiqui and Jean Pesme, the World Bank Director for Bangladesh and Bhutan.