Bangladesh has more banks than the size of its economy warrants, a surplus that policymakers and economists have long argued should be trimmed. The debate over consolidation has now reached the parliament as well. Yet amid those discussions, the youth and sports ministry is pushing to open a specialised bank for young people, to be called “Jubo Bank (Youth Bank)”.

The Department of Youth Development discussed the plan at a May 7 meeting attended by State Minister for Youth and Sports Md Aminul Haque. Participants noted that many young people cannot access loans through conventional banking because they lack collateral, experience or financial capacity, causing promising projects to go unrealised. A youth-friendly bank, they said, would offer loans on easy terms and provide financial backing for entrepreneurship, job creation and small enterprises. Such a bank, they added, could significantly aid skills development, startup support and technology-driven ventures.

The meeting decided to examine the feasibility of the Youth Bank and to review the policies, financing structure and administrative framework needed to run it.

Asked about the plan, Youth and Sports Secretary Md Mahbub-ul-Alam told Bonik Barta: “We already do a kind of banking. Through the youth development department, we provide seed financing of up to BDT 200,000 to those who receive training. We are now discussing establishing a bank to take this to an institutional level. This initiative is to help those who want to start a business or become entrepreneurs with small capital. It’s still at the preliminary stage. We will consult various stakeholders.”

The proposal surfaces as the country’s existing specialised banks face a range of problems. The three state-owned lenders — Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank (RAKUB) and Probashi Kallyan Bank (PKB) — and three non-scheduled institutions — Ansar-VDP Unnayan Bank, Karmasangsthan Bank and Palli Sanchay Bank — all suffer from capital shortfalls, losses and multiple crises.

The Krishi Bank, founded to lift the fortunes of farmers, is itself struggling to survive. Years of losses have driven the specialised Krishi Bank’s capital shortfall to BDT 292.07 billion. It racked up net losses exceeding BDT 190 billion in the last six fiscal years alone. By the end of June last year, 49.44 percent of its loans had turned non-performing.

Other specialised state banks are in similar shape. Central bank data show they held BDT 470.86 billion in loans at the end of March, of which BDT 191.75 billion — 40.72 percent — were sour.

Probashi Kallyan Bank was created in 2010 to improve expatriate welfare. A decade and a half on, it has done little for that mission. Like its peers, it loses money. It bled nearly BDT 1 billion last fiscal year despite running a limited operation, even after Bangladesh Bank brought it onto the scheduled list in 2018 to enable full commercial banking.

Against that backdrop, many economists question the point of setting up another specialised bank without first fixing the ones that exist. Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue, told Bonik Barta: “There’s no need to create banks sector by sector. No developed country has so many. Our banks are unhealthy and they fail to achieve the purpose for which they were founded. The country already has many specialised banks — everyone knows their condition. Launching a new one without fixing them will only add to the burden. Existing banks can offer the same facilities that prompt the creation of new ones.”

The economist favours merging existing banks and cutting their number instead. “Rather than creating new ones, we should consolidate the banks we have and make them more effective,” she said. “They can already meet the demand for job creation, economic development and private-sector support. There’s no further need for specialised banks.”

During general debate on the proposed 2026–27 budget in parliament on June 28, BNP lawmaker AM Mahbub Uddin Khokon argued, “The number of banks needs to be reduced. Shortfalls in the banking sector ultimately have to be covered with public money. That’s why the safety of people’s deposits must be ensured.”

Professor Dr Md Shahidul Islam Zahid, chair of banking and insurance department at the University of Dhaka, struck a more measured note. “Only 25 to 27 percent of the population is under banking coverage. A vast majority remains outside. If a bank is created for them, that’s fine. But in this country, we don’t honour the purpose for which banks are founded. Many of our banks are in precarious financial health. Before deciding, we must be certain a new bank won’t turn into another weak institution.”

Bangladesh currently has 62 scheduled banks: six state-owned commercial banks, 43 private commercial banks, nine foreign banks and three state-owned specialised banks. Five more unscheduled banks sit outside the main regulatory list.