BCCCI Pushes Chinese Bank Entry Despite Crowded Banking Market

Bangladesh could reduce trade costs with China, ease financing constraints on local businesses and attract fresh investment by allowing Chinese banks to operate in the country and facilitating trade settlements in yuan, claims Bangladesh China Chamber of Commerce and Industry (BCCCI) President Mohd Khorshed Alam.

In an exclusive interview with The Daily Observer, he said the absence of Chinese banks in Bangladesh was a major gap in financial connectivity, despite China being the country's largest trading partner, with bilateral trade approaching $20 billion annually.

"Bangladesh has nearly $20 billion in annual trade with China, but surprisingly, no Chinese bank has a branch here. This is a major gap in our financial connectivity," he said at his office in Dhaka on Monday.

"Chinese banks are highly interested in operating in Bangladesh. Allowing at least one financially strong Chinese bank to establish operations here would strengthen financial connections and trade between the two countries," he added.

However, Alam’s proposal comes amid questions over whether Bangladesh, already home to 63 scheduled banks, needs more lenders or should prioritise consolidating and strengthening existing ones.

Alam's proposal comes amid growing debate over whether Bangladesh, with 63 scheduled banks against Nepal's 20, India 33, needs more lenders or urgent consolidation to strengthen its troubled banking sector, particularly as Standard Chartered plans to exit retail and wealth banking in the country, raising questions about market competitiveness and the viability of further expansion.

Bangladesh has 63 scheduled banks, compared with 20 commercial banks in Nepal. Standard Chartered's planned sale of its retail and wealth banking business in Bangladesh, while retaining corporate and investment banking, has also prompted questions about the structure and competitiveness of the domestic banking market.

With widespread capital shortfalls, mounting bad loans and governance weaknesses, the banking sector faces pressure to consolidate and improve financial health. Nevertheless, proponents of foreign bank entry argue that financially strong international lenders could bring fresh capital, technology, expertise and trade-financing facilities.

Khorshed said the entry of Chinese banks should be viewed primarily as an opportunity to strengthen bilateral trade and investment rather than simply increase the number of lenders.

The BCCCI organised a business event titled 'Bangladesh Day' at the headquarters of a Chinese bank in Beijing on October 20 to attract Chinese investment.

Eleven Chinese financial institutions attended, including three of the world's four largest banks by assets - Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC) and Bank of China (BOC). China Construction Bank (CCB) is the fourth.

Twenty-six Chinese companies from infrastructure, engineering, power, renewable energy, information technology, electronics and agricultural technology sectors also participated.

Khorshed described the participation of major Chinese financial institutions as encouraging, expressing hope that at least one would take the initiative to establish operations in Bangladesh. However, none has publicly announced a final investment decision.

He said a Chinese bank could help businesses open letters of credit (LCs) in yuan, settle payments more directly and reduce currency-conversion costs and intermediary banking charges.

Bangladeshi importers currently depend largely on local banks and international correspondent banking arrangements to pay Chinese suppliers, often incurring additional transaction costs and delays.

"With a Chinese bank here, businesses will be able to open letters of credit in Chinese yuan. They can also settle payments more directly, reducing transaction costs and delays," he said.

Bangladeshi exporters could also receive payments in yuan and use the same currency to pay for imports from China, reducing their dependence on the US dollar in bilateral transactions.

Even a saving of around one per cent on trade transactions could make a significant difference for businesses handling millions of dollars, he added.

Beyond facilitating trade settlements, Chinese banks could help address financing shortages among local businesses, particularly those seeking working capital and long-term investment funds.

Foreign banks would need to bring capital into Bangladesh to establish operations and could deploy the funds in banking activities, including lending to businesses, he said.

"Many of our local banks are facing capital and financing constraints. Chinese banks could create another source of finance for our industrial sector," he said.

The push for stronger banking links comes as bilateral trade continues to expand. Trade between Bangladesh and China reached a record $12.8 billion in January-June 2026, up 10.6 per cent from the same period a year earlier, according to the Chinese Embassy in Dhaka.

China has remained Bangladesh's largest trading partner for 16 consecutive years, from 2010 to 2025. Bilateral trade stood at around $19 billion in fiscal year 2024-25.

China's cumulative investment in Bangladesh reached approximately $3.6 billion by June 2026, while Chinese direct investment rose around 50 per cent year-on-year in 2025, according to the embassy.

Khorshed said stronger financial connectivity could help attract further Chinese investment while providing access to technology and financing for industrial development.

The BCCCI has already taken several initiatives to facilitate Chinese banking operations in Bangladesh. During a visit to Kunming in June, the chamber signed a memorandum of understanding with China's Bank of Huzhou to promote banking cooperation and yuan-based trade settlements.

On September 10, it submitted six proposals to the Commerce Ministry, including facilitating the establishment of a Chinese bank branch, expanding Bangladeshi exports to China and setting up at least 20 permanent exhibition centres for Bangladeshi products in the Chinese market.

At the October 20 Beijing event, China Exim Bank Vice President Wang Kang said the bank was involved in nearly 40 projects in Bangladesh covering infrastructure, energy, agriculture, processing and manufacturing.

Khorshed urged the government and Bangladesh Bank to accelerate discussions with interested Chinese financial institutions and facilitate the regulatory procedures required for their entry.

He, however, cautioned that banking facilities alone would not be enough to attract large-scale Chinese investment. Energy shortages, inadequate infrastructure, a lack of technically skilled workers and weaknesses in the business environment remained major obstacles.

Investors need reliable electricity and gas supplies, adequate industrial facilities and a predictable business environment before committing substantial capital, he said.

"Investors want certainty. They cannot invest millions of dollars if they are unsure about energy supplies, security and the business environment," he said.

He expressed hope that the entry of a major Chinese bank would encourage other financial institutions to explore Bangladesh, strengthening financial links, lowering bilateral trade costs and supporting industrial investment.