TCB Aims to Become Self-Reliant in Four to Five Years, Wants to Cut Subsidy by Tk 500 Crore This Year

The state marketing agency Trading Corporation of Bangladesh (TCB) aims to cut its subsidy by Tk 500 to 600 crore this fiscal year by reducing bank loan interest and operating costs and increasing income from commercial activities. It also plans to reduce dependence on government subsidy and become financially self-reliant within the next four to five years. The government, however, has no plan to raise the prices of existing subsidised goods.

TCB chairman Brigadier General Mohammad Faisal Azad said, 'A plan has been taken to make the organisation financially self-reliant in four to five years by reducing dependence on government subsidy. For this, steps have been taken to cut product purchase costs, bank loan interest and operating expenses, alongside increasing income from commercial activities.' He said, 'This fiscal year we aim to cut subsidy spending by Tk 500 to 600 crore. But if the number of beneficiaries rises, the organisation's total subsidy need may also increase.'

In fiscal 2025-26, TCB's subsidy spending was Tk 2,514 crore 22 lakh. The budget allocation for this sector was about Tk 5,500 crore. The difference between purchase and sale prices of goods, and bank loan interest, are the two major sources of the subsidy.

The TCB chairman said, 'TCB's main problem is that goods have to be sold at much lower prices than the price at which they are bought. Some goods are sold at 40 to 45 percent less than the purchase price. Among these, edible oil requires the largest subsidy.'

Since 2022, TCB has sold edible oil at Tk 100 per litre. At present, however, buying each litre costs about Tk 190 to 195 including dealer commission and related expenses. Adding bank loan interest takes the cost to about Tk 200.

To reduce bank loan interest, TCB is now buying sugar and lentils in cash instead of using letters of credit (LC) and loans against trust receipts (LTR). This saved about Tk 14 crore 19 lakh in bank loan interest in the first two months of the current fiscal year. Buying sugar and lentils in cash from the local market in the same period also cut LC charges and related expenses by about Tk 42 lakh 25 thousand.

The chairman said the organisation's annual bank loan interest cost is currently about Tk 400 to 450 crore, and the aim is to cut about Tk 300 crore from that cost. Faisal Azad said, 'We are reducing dependence on letters of credit (LC) and on loans from banks and the government. Wherever possible, goods are being bought in cash.' TCB has also started opening LCs and taking LTR facilities through private banks, as they offer loans at 1.25 percent lower interest than state-owned banks.

TCB has launched an application programming interface (API) to ensure sale proceeds are deposited quickly into the agency's bank account. Previously the money came through the accounts of deputy commissioners (DCs). Under the new system, sale proceeds from dealers will be deposited quickly into TCB's account, increasing cash flow and making it easier to buy goods in cash without depending on bank loans.

To raise income beyond subsidies, TCB has brought soap, detergent and salt to market as commercial products. Although sold below prevailing market prices, they are sold above their purchase price. In fiscal 2025-26 the agency made a profit of Tk 24 crore 37 lakh from commercial activities. Stressing the need to expand income sources, Faisal Azad said, 'It is not possible to reduce subsidy pressure only by cutting costs. We also have to increase income.'

TCB has also changed its distribution system to cut transport, loading and unloading and related costs. Previously goods were sent from regional warehouses to district administration warehouses; now goods are supplied directly from regional warehouses, a system effective since last September. The agency has also moved to cut repetition and unnecessary spending on survey work. The chairman said survey and related work costs about Tk 60 to 70 crore a year, and stopping repetition of similar surveys could save about Tk 40 to 50 crore.

The chairman, however, warned that the total subsidy could rise if the number of beneficiaries increases. At present about 50 lakh people buy goods each month under TCB's activities, including additional products. The target this fiscal year is to raise that number to 70 to 80 lakh. Faisal Azad said, 'If we can reach 80 lakh people this year, we hope to reach one crore people next fiscal year.'

Stating that the government has no plan to raise prices of existing subsidised goods, the TCB chairman said, 'These goods will be sold at the previous prices. New commercial products are also being added, but buying them is not compulsory for beneficiaries.' He said, 'Beneficiaries can buy the new products if they wish. Buying these products is entirely optional. No one will be forced to buy them.' He hopes dependence on government subsidy can gradually be reduced over the next four to five years through higher commercial income, lower loan interest and operating costs, and greater efficiency.