The World Bank has set its sights on financial sector reforms in Bangladesh in light of events in recent years such as the Hall-Mark scam and the Bangladesh Bank reserve heist.

For that end, a high-level team of the Washington-based multilateral lender yesterday offered the government $500 million for this fiscal year.

From next fiscal year, a three-year programme involving $9 billion will be offered, where financial sector reforms would take the spotlight.

A seven-member team led by Sebastian-A Molineus, director of the World Bank Group's finance and markets global practice, met with Finance Minister AMA Muhith at his secretariat office. Qimiao Fan, country director of the WB in Bangladesh, was also present.

The objective of the meeting was to discuss the government's financial sector reform priorities and explore how best the WB can support Bangladesh in furthering financial sector development, as per the lender's proposal.

After the meeting the finance minister told reporters that the WB earlier wanted to extend $500 million as budget support.

But now, it has proposed to convert it into a development programme, the main focus of which will be good governance in the financial sector, integrity and stability.

“I have told them to give a roadmap of what they want to do in the financial sector. They are likely to give it next week,” Muhith said.

The programme will be finalised after discussions with other related parties, he added.

“We discussed with the finance minister the key challenges and the government reforms in the financial sector and how the World Bank can support the country's financial sector development,” Fan told reporters after the meeting.

While replying to queries, he said there is a wide range of challenges in the financial sector, including banking sector supervision, non-performing loans of the banking sector and financial inclusion.

“The financial sector is a priority sector for World Bank Group support and we have a number of operations currently under implementation or under preparation for financial sector development.”

Governance is one of the issues in the financial sector, which is dominated by commercial banks including the state-owned ones. “And clearly improving governance would be one of the key issues in the financial sector,” he added.

Muhith said the tenure of three-year International Development Association-17 loan programme will end in June this year. A new programme, IDA 18, will start from July for three years. Under the existing programme, the country received $2 billion every year on an average. In the next programme the amount will be $3 billion each year.

Bangladesh is now the largest recipient of IDA resources: the country accounts for close to 10 percent of overall IDA, according to Fan. IDA has got much larger replenishment for the next three years, so Bangladesh will get a significant increase. “We don't have the number yet, but it will be a significant increase.” In the new programme, stability and integrity of the financial sector will be a big focus, Muhith said.

“Bangladesh Bank has given it a serious talk, particularly after the hacking. In the new programme, financial inclusion will also get significant importance.” Muhith went to praise former BB governor Atiur Rahman, saying that many programmes for financial inclusion were taken during his tenure.

“The stability and integrity of this market has become a matter of great importance.”

In the next programme, capital market development, bond market and the livestock sector will get importance.

The finance minister also said the progress of the three projects under the existing programme involving around $1 billion is very slow. The tenure of the financing will end in June, so the WB team has called for acceleration such that the projects can be wrapped up by the deadline.