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The Bangladesh Association of Banks has welcomed the proposed FY27 national budget, describing it as a significant step toward restoring stability in Bangladesh’s financial sector.

In a statement issued on Sunday, the apex body representing bank sponsor-directors pledged full cooperation with the government in implementing the budget agenda presented by Finance and Planning Minister Amir Khosru Mahmud Chowdhury.

The association praised the government’s decision to allocate around Tk 400 billion for the recapitalisation of weak banks, calling it a crucial step in strengthening the banking system.

BAB also welcomed the planned introduction of a risk-based supervisory framework aligned with international standards on capital adequacy and corporate governance, along with the government’s commitment to reducing political interference in banking.

The association further praised plans to develop corporate and municipal bond markets, saying these initiatives could reduce excessive dependence on bank financing.

According to BAB, raising the excise duty exemption threshold on deposits to Tk 400,000 and rationalising excise duty into a single charge per loan facility would benefit both depositors and borrowers.

The banking body also appreciated the newly announced Tk 600 billion stimulus package, which includes a 6 percent interest subsidy, as well as measures aimed at improving the investment climate through easier dividend repatriation, simplified trade procedures and single-window investment services.

BAB supported the government’s strategy of relying more on external borrowing to finance the budget deficit, arguing that it could ease pressure on domestic credit markets.

It said member banks are ready to support the government’s economic agenda through stimulus financing, funding for economic zones and export-oriented industries, and expanding digital financial services.

However, BAB stressed that bank recapitalisation alone will not be enough.

It called for stronger recovery measures, including the swift recovery of misappropriated assets, strict action against wilful defaulters and transparent handling of irregular shareholdings.

The association also recommended a dedicated budgetary allocation for establishing an Asset Management Company (AMC) to help weak banks reduce non-performing loans (NPLs) and strengthen their balance sheets.

BAB further urged the government to ensure the proposed bank resolution framework includes safeguards preventing individuals responsible for the distress of financial institutions from regaining influence in the sector.

At the same time, the association raised concerns over the government’s planned Tk 1.12 trillion borrowing from the banking system, warning that it could further constrain private-sector credit, which is already growing at a historic low.

On taxation, BAB argued that publicly listed banks should be taxed similarly to other listed companies and sought a medium-term roadmap to reduce the current 37.5 percent corporate tax burden on banks.

It also called for tax relief for weak banks to help them rebuild capital, meet provisioning requirements and improve financial resilience.

The association urged withdrawal of taxes that discourage institutional investment in the stock market, including taxes on dividend income from listed securities and the additional 10 percent tax on stock dividends issued to meet regulatory capital requirements.

BAB also proposed excluding loan-loss provisions and provisioning shortfalls from taxable income, arguing that banks should not be taxed on income already absorbed by regulatory capital and provisioning requirements.

To support the country’s digitalisation drive, the banking body urged the government to exempt investments in banking technology, software, hardware, payment infrastructure and cybersecurity systems from duties and taxes.