The government is set to aggressively tap into the banking system to bridge its widening fiscal deficit, planning to borrow approximately 1.5 lakh crore BDT in the final quarter (April-June) of the current fiscal year. According to the auction calendar released by Bangladesh Bank, this massive amount will be raised through Treasury bills and bonds.

Bank executives have raised red flags, stating that meeting this enormous demand will be a daunting challenge for the banking sector. They argue that the majority of new deposits are being consumed by government borrowing, leaving the private sector severely credit-starved. While the FY 2025-26 budget initially targeted 1.25 lakh crore BDT from the banking sector, the government has already exhausted 62,246 crore BDT in the first six months alone. Analysts warn that this reliance on domestic banks to fund operational deficits could stifle long-term economic growth and private investment.