---

Bangladesh Bank is stepping up the digitisation of financial transactions, aiming to help raise the country’s tax-to-GDP ratio by 3 to 3.5 percentage points over the next two years while reducing cash-related costs and improving transparency.

Bangladesh’s tax-to-GDP ratio stood at 6.78 per cent in fiscal year 2025-26, up slightly from 6.70 per cent a year earlier, based on provisional National Board of Revenue (NBR) collection data.

“Comprehensive digitisation could widen the tax base, improve transparency and bring more economic activities under the formal financial system,” said Bangladesh Bank Executive Director Md Sirajul Islam.

He pointed to Pakistan, where the tax-to-GDP ratio rose from 8.8 per cent to 10.3 per cent over the past two fiscal years, according to the country’s Federal Board of Revenue.

Bangladesh Bank plans to expand digital payments further by introducing person-to-person (P2P) transfers through Bangla QR from November 1. Customers will be able to transfer money between participating bank and mobile financial service accounts by scanning another person’s QR code or uploading its image through their mobile apps.

The service is expected to extend Bangla QR beyond merchant payments, making digital transfers easier for individuals, small traders and informal-sector workers.

Banks, mobile financial service providers, payment service providers and payment system operators have been directed to integrate the required features into their applications.

The central bank has also sought to lower the cost of digital transactions. From October 1, 2026, it set the interchange reimbursement fee for Bangla QR transactions at zero and introduced immediate settlement of payments to merchants.

The broader push is aimed at reducing Bangladesh’s heavy reliance on cash. A Bangladesh Bank study estimated that cash transactions cost the economy Tk1.70 trillion a year, equivalent to 3.24 per cent of GDP in 2023. By comparison, the annual cost of the digital payments ecosystem was estimated at Tk59.64 billion, or 0.11 per cent of GDP.

The annual per capita cost was estimated at Tk9,938 for cash transactions, compared with Tk348 for digital payments.

“Printing banknotes, transporting them and managing their circulation involve considerable costs for Bangladesh Bank,” Sirajul Islam said.

Banknotes also have to be replaced as they become worn or damaged, adding to recurring costs. Greater use of digital payments could reduce these expenses while helping curb corruption, theft and misuse of funds.

The study estimated annual cash-related costs at Tk368 billion for banks, Tk280 billion for consumers and Tk4 billion for Bangladesh Bank. These include currency printing and distribution, cash transportation and security, branch and ATM operations, and the time spent handling cash.

Digitisation could also strengthen tax administration by creating electronic records of economic activity. Such data could help authorities identify undeclared income, improve compliance and bring more businesses into the formal economy.

An IMF study published in 2022 estimated that bringing government digitalisation up to the level of the best-performing countries could potentially generate revenue gains equivalent to about 3 per cent of GDP through more efficient VAT, personal income tax and corporate income tax collection.

That estimate is a modelled potential outcome, rather than a guarantee of additional revenue within two years.

Realising the broader revenue potential would require more than digital payments. Greater integration between banking and tax records, wider electronic VAT invoicing, stronger e-filing and e-payment systems, and better information-sharing among government agencies would also be needed.

Closer coordination among Bangladesh Bank, the NBR, banks and payment service providers will therefore be critical if digital transaction records are to translate into higher tax compliance and revenue mobilisation.