BAB applaud FY27 budget, call for asset recovery and tax relief

The Bangladesh Association of Banks (BAB) has welcomed the proposed national budget for FY2026-27, describing it as a reform-oriented financial roadmap, while urging the government to ensure recovery of misappropriated banking assets, protect private-sector credit and provide a fair tax regime for the banking industry.

In a statement issued on Sunday, BAB said the budget reflects a strong commitment to restoring stability and confidence in the country's financial sector through bank recapitalisation, governance reforms and measures aimed at deepening capital markets.

The association particularly praised the government's decision to allocate around Tk 40,000 crore for the recapitalisation of weak banks, introduce a risk-based supervisory framework aligned with international standards, curb political interference in banking and promote the development of corporate and municipal bond markets.

BAB also welcomed the increase in the excise-duty exemption threshold on bank deposits to Tk 4 lakh and the rationalisation of excise duty on loan facilities. According to the association, these measures will provide relief to both depositors and borrowers.

The bankers' body further lauded the Tk 60,000 crore Stimulus Package 2026, featuring a 6% interest subsidy, alongside reforms aimed at facilitating investment through simplified trade procedures, dividend repatriation and single-window services.

"The budget places the banking sector at the centre of economic recovery and growth," the association said, adding that its member banks are prepared to support implementation through stimulus financing, funding for economic zones and export industries and expansion of digital financial services.

However, BAB stressed that recapitalisation efforts must be accompanied by accountability and asset recovery.

It called for swift legal action to recover funds allegedly siphoned from banks, stronger enforcement against wilful defaulters and transparent handling of irregularly acquired shareholdings.

The association also proposed the establishment of an Asset Management Company (AMC) to address the growing burden of non-performing loans and help restore the financial health of troubled banks.

Expressing concern over the government's plan to borrow Tk 1.12 lakh crore from the banking system, BAB warned that excessive public-sector borrowing could crowd out private-sector investment at a time when private credit growth remains weak.

It urged authorities to adhere to external financing plans and accelerate bond market development to reduce reliance on bank borrowing.

On taxation, BAB said the current corporate tax rate of 37.5% for banks should be reviewed. It recommended a medium-term roadmap to align the tax treatment of listed banks with that of other listed companies and called for temporary tax relief for weak banks to support capital rebuilding.

The association also opposed taxation of dividend income earned by banks from stock market investments, arguing that such income is already taxed at the company level and that additional taxation could discourage institutional participation in the capital market.

BAB further suggested allowing loan-loss provisions and provisioning shortfalls to be treated outside taxable income, saying banks should not be taxed on earnings already absorbed by regulatory requirements.

To support the government's vision of a cashless and digitally inclusive economy, the association called for tax and duty exemptions on banking technology, including software, hardware, cybersecurity systems, payment infrastructure and data centres.

In a statement, BAB Chairman Abdul Hai Sarker said the budget recognises the importance of a strong banking sector for sustaining economic growth but stressed that reform efforts must be backed by accountability and implementation.

He said public confidence can only be restored if looted assets are recovered, private-sector credit remains protected and policies support banks' efforts to rebuild capital.

The association reaffirmed its support for the government, Bangladesh Bank and the National Board of Revenue and expressed its willingness to engage in further consultations on the Finance Bill 2026 and related implementation measures.