The government has proposed strengthening Bangladesh’s capital market and expanding alternative financing channels as part of its strategy to reduce the economy’s heavy reliance on bank loans and support long-term investment.
Presenting the national budget for the 2026-27 financial year in the parliament on Thursday, finance and planning minister Amir Khosru Mahmud Chowdhury said that the government would undertake structural reforms in the banking and capital market sectors to build a modern and sustainable financial system. The budget gave priority to the development of corporate bonds, mutual funds, green bonds, Sukuk and other long-term financing instruments.
The government also plans to expand corporate bond market and formulate a framework for issuing municipal bonds to finance local government activities and urban infrastructure projects.
The minister acknowledged that Bangladesh’s capital market had remained underdeveloped and failed to play its expected role in mobilising long-term capital, forcing businesses to depend largely on bank financing.
He said that the government wanted to gradually shift investment financing away from excessive dependence on debt and towards greater use of equity financing and capital market instruments.
To achieve that goal, the government plans to strengthen the regulatory framework, improve market governance and enhance investor protection to restore confidence in the stock market.
Listing procedures will be reviewed and simplified to encourage more qualified companies to enter the stock market.
The Initial Public Offering process will be made technology-based and time-bound, with applications, approvals and disclosures processed through an integrated online platform.
The government will also examine the possibility of direct listing for eligible companies.
To improve market stability, participation by pension funds, insurance companies, asset management companies and mutual funds will be increased.
Measures will also be taken to expand professional fund management and channel long-term savings into productive investments.
In another move, the government plans to operationalise the country’s first commodity exchange and assess the feasibility of introducing new investment products, including Real Estate Investment Trusts, Exchange Traded Funds and hedging instruments.
The budget also proposed improving disclosure standards, audits, credit ratings and research quality while clarifying the responsibilities of market intermediaries.
The government believed that the reforms would transform the capital market into a stronger source of long-term financing for industry, infrastructure and business expansion while easing pressure on the banking sector and attracting domestic and foreign investment.
