The Asian Development Bank (ADB) on Thursday approved two major loans totaling $900 million to support critical reforms in Bangladesh’s banking sector and to bolster the country’s climate resilience and inclusive development efforts.
A $500 million policy-based loan under the Stabilizing and Reforming the Banking Sector Program (Subprogram 1) will help strengthen regulatory supervision, improve corporate governance, and tackle the country’s longstanding issues with nonperforming loans. The program will also support the Bangladesh Bank in enhancing its liquidity management framework and progressing toward international banking standards.
“The key binding constraints in the banking sector include a lack of robust asset quality, tight liquidity, and inadequate financial intermediation leading to low rates of financial inclusion,” said Sanjeev Kaushik, ADB Principal Financial Sector Specialist. “This program will help the sector build resilience, improve financial access for small businesses, and align with international norms.”
The banking sector reforms aim to shift the financial system away from its narrow industrial lending base, expanding access to longer-term, affordable credit for micro, small, and medium enterprises. ADB also emphasizes the importance of strengthening digital infrastructure to promote cost-effective financial inclusion.
In a separate but complementary initiative, ADB has approved a $400 million loan for the second phase of the Climate-Resilient Inclusive Development Program (CRIDP). The program seeks to help Bangladesh meet its climate goals, strengthen adaptation efforts, and reduce greenhouse gas emissions in key sectors. It is cofinanced by the Agence Française de Développement ($113 million) and the Asian Infrastructure Investment Bank ($400 million).
“CRIDP will support institutional reforms and strategic planning, enabling government agencies to align their actions with national climate policies,” said Sameer Khatiwada, ADB Senior Public Sector Economist. “The program also promotes inclusive, youth-led, and gender-responsive climate adaptation at the local level.”
Key initiatives include the establishment of the Bangladesh Climate Development Partnership to coordinate climate finance, the scaling of disaster risk insurance schemes, and updates to strategic plans for transport and energy, particularly in Dhaka. The country’s high vulnerability to climate change—projected to cost up to one-third of GDP by 2070 if emissions continue unabated—makes these interventions urgent and essential.
Together, the two ADB-backed programs underscore the bank’s commitment to fostering sustainable, inclusive economic development in Bangladesh. With combined efforts to stabilize financial systems and build climate resilience, the initiatives aim to enhance long-term economic stability, reduce poverty, and safeguard future development prospects.
ADB, founded in 1966 and owned by 69 members—50 from Asia and the Pacific—continues to support transformative reforms across the region through strategic partnerships and innovative financing tools.