Bangladesh’s banking sector has come under renewed pressure as government borrowing surged sharply midway through the 2025–26 fiscal year. According to the latest Bangladesh Bank report, between July and January 4 the government borrowed a net Tk 59,756 crore from banks, representing 57.45 percent of its annual target of Tk 104,000 crore. This borrowing is about 619 percent higher than the same period last fiscal year, when the government had borrowed Tk 8,312 crore.

Sector insiders noted that at the start of the fiscal year, the government had reduced development spending and benefited from strong revenue growth and foreign loans, keeping borrowing low. However, rising development expenditures, investments in Islami Bank, election-related costs, and increased subsidy and interest payments have driven borrowing upward again. To meet financing needs, the government also held two additional auctions in December, raising about Tk 10,000 crore through treasury bills and bonds.

The report shows total government debt from banks reached Tk 610,661 crore by January 4, up from Tk 550,904 crore at the end of the previous fiscal year, raising concerns about liquidity and private sector credit flow.