Govt plans bond market push to cut reliance on bank lending

The government plans to strengthen Bangladesh's capital market and develop alternative financing sources in the budget for fiscal year 2026-27, aiming to reduce the economy's heavy dependence on bank lending.

Finance and Planning Minister Amir Khosru Mahmud Chowdhury is expected to propose a shift from a debt-driven economy to one led by investment and foreign direct investment (FDI) in the proposed budget.

As part of that strategy, the government plans to expand the corporate bond market and promote alternative financing instruments to support long-term investment.

Long-term financing options will be strengthened through the development of corporate bonds, mutual funds, green bonds, and sukuk.

The government also plans to formulate a framework for issuing municipal bonds to help finance local government and urban infrastructure projects.

The measures are part of a broader effort to reform the financial sector and diversify sources of investment financing, easing pressure on the banking system.

The government believes that developing alternative financing channels will support long-term investment while helping create a more stable, competitive, and sustainable financial system.