Tk 1,276cr FSSP-II awaits ECNEC approval to strengthen financial sector

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A Tk 1,276.30-crore technical assistance project aimed at strengthening Bangladesh's financial-sector safeguards, modernising technology-driven banking and supporting banking-sector reforms is now awaiting approval by the Executive Committee of the National Economic Council (ECNEC).

The ECNEC meeting will be held on September 16 at Bangladesh Secretariat with its Chairman and Prime Minister Tarique Rahman in the chair.

The Financial Sector Support Project-II (FSSP-II) will be implemented by Bangladesh Bank under the Financial Institutions Division of the Ministry of Finance over five years from July 2026 to June 2031.

Of the total project cost, Tk 1,261.54 crore will come as foreign financing from the World Bank's International Development Association (IDA), while Tk14.76 crore will be financed from Bangladesh Bank's own resources.

Talking to BSS, a senior official of the Bangladesh Bank (BB) mentioned that the project has been designed to strengthen the safety net of the financial sector, enhance technology-based banking and support ongoing banking-sector reform initiatives.

Its major objectives include upgrading ICT infrastructure and supervisory capacity, improving institutional capacity, strengthening procurement related to ICT infrastructure and providing consultancy services, he added.

He said that the project will also strengthen the financial capacity of the Deposit Insurance Trust Fund (DITF), reduce payment periods and support effective implementation of bank resolution and restructuring.

It will also seek to improve governance and financial stability of state-owned banks, he added.

According to project document, Bangladesh's financial sector is undergoing rapid transformation amid banking-system modernisation, growing global competition and rising domestic demand.

However, high non-performing loans, governance weaknesses, outdated ICT systems and limited technological capacity continue to pose challenges to the sector.

It said weaknesses in supervisory ICT infrastructure and the lack of integrated information management systems are also hindering efforts to address emerging risks, including cyberattacks and cross-border financial risks.

These challenges have affected depositor confidence as well as financial and economic stability.

The FSSP-II has been taken as a continuation of the earlier Financial Sector Support Project implemented by Bangladesh Bank with World Bank assistance, with the new project intended to help restore long-term stability in the financial sector.

The project comprises three major components - enhancing supervisory capacity and systems; strengthening financial-sector safeguards and supporting banking-sector resolution and restructuring; and providing implementation support.

The second component specifically covers financial-sector safeguards, bank resolution and restructuring and state-owned bank reforms.

A significant portion of the project allocation will go to technological upgrading. The proposed expenditure includes Tk 711.72 crore for ICT equipment, Tk 355.36 crore for computer software and Tk 7.64 crore for databases, besides other ICT and office equipment.

The Planning Commission has recommended the project for ECNEC approval, saying it would help strengthen financial-sector safeguards, technology-based banking, banking reforms, bank resolution and restructuring and ultimately improve financial stability in the banking sector.

The project proposal was received by the Planning Commission in October 2025, while the Special Project Evaluation Committee (SPEC) meeting was held on November 23, 2025. The restructured TAPP was subsequently received in May 2026 for further processing. -BSS