Govt Seeks Alternative Financing as Banks Face Capital Shortfall: Khosru

Finance Minister Amir Khosru Mahmud Chowdhury on Sunday said Bangladesh’s banking sector is facing a serious capital shortfall, partly due to large-scale money laundering, and that the government is exploring alternative financing mechanisms and dedicated investment funds to support economic growth.

He made the remarks as the chief guest at a luncheon discussion titled “Building Investor Confidence: From Policy Reforms to Effective Implementation”, organised by the American Chamber of Commerce in Bangladesh (AmCham) at a city hotel.

Khosru said the banking sector’s structural weaknesses have made it difficult to meet the country’s investment needs through conventional banking channels alone.

“There is a serious deficit in the banking sector as a huge amount of money has been laundered out of the country,” he said, adding that depositors are struggling to recover their funds and that immediate recapitalisation is necessary.

In response, the government is developing alternative financial channels and exploring dedicated investment funds, he said, adding that the initiatives have received positive responses from foreign countries and international organisations.

Addressing structural challenges facing businesses and trade, Khosru described Bangladesh as an “over-regulated” country where existing regulations and regulatory systems often fail to function effectively.

He outlined several reform measures being pursued by the government, including restructuring the National Board of Revenue (NBR) to separate its policy-making and tax administration functions.

The government also plans to fully automate investor services, tax processing and customs procedures to create a more efficient and business-friendly environment, he said.

Khosru said a major portion of the national budget would be directed towards implementing comprehensive structural reforms.

He also said the government is moving towards greater use of advanced information and communication technology (ICT) and artificial intelligence (AI) to improve administrative efficiency.

On the country’s energy shortages, the finance minister said the crisis requires a long-term strategic solution rather than temporary measures.

AmCham President Syed Mohammad Kamal, in his opening remarks, said the business community is prioritising energy security, stable and predictable tax policies, a business-friendly regulatory environment and overall macroeconomic stability.

HSBC Bangladesh CEO Mahbubur Rahman said Bangladesh has significant potential to attract foreign investment, citing its large domestic market, strong export sector and rising remittance inflows, which he said are helping support currency and foreign-exchange stability.

The discussion brought together business leaders, economists, senior government officials, foreign trade representatives and members of AmCham.