Bangladesh Bank (BB) Governor Ahsan H Mansur on Wednesday expressed optimism that the country’s foreign exchange reserves could rise to between $34 billion and $35 billion by the end of the 2025–26 fiscal year, driven primarily by domestic sources rather than external borrowing.

Speaking at a discussion titled “Banking Sector Reforms: Challenges and Actions,” organised by the Economic Reporters’ Forum (ERF) in the capital, the governor said the central bank is not exerting pressure to procure dollars from the market. Instead, foreign currency is being purchased through market-based auctions.

Mansur noted that Bangladesh is gradually moving from a fragile economic position toward stability, adding that concerns over the balance of payments (BoP) and dollar availability have largely eased.

Addressing transparency in the banking sector, the BB governor acknowledged that the challenges facing banks are deeper than initially estimated. He said that while earlier projections placed the ratio of non-performing loans (NPLs) between 25 percent and 27 percent, the actual figure has now reached around 36 percent.

Despite the severity of the situation, he reaffirmed the central bank’s commitment to transparency, stressing that no information would be hidden and that the true state of the economy would be disclosed to the public.

As part of ongoing structural reforms, Mansur announced plans to merge five struggling banks, assuring depositors that their funds would remain secure following the mergers. To protect small savers, deposit insurance coverage has been set at Tk 2 lakh. He added that if new entities invest Tk 20,000 crore, the risk of depositor losses would be virtually eliminated.

The discussion was also addressed by Syed Mahbubur Rahman, managing director of Mutual Trust Bank, who highlighted the historical roots of the current banking crisis. He said the emergence of a “mafia system” in the sector began with the forced takeover of Islami Bank, which accelerated existing problems.

Rahman noted that commercial banks were often compelled to provide long-term industrial financing due to a weak capital market. While acknowledging that recent political changes have helped reduce volatility in the dollar market and support a gradual rise in reserves, he cautioned that banking reforms alone would not be sufficient.

He stressed that resolving the sector’s deep-seated problems would require strong political will, alongside technical and regulatory reforms.