Prior to adopting Sustainable Development Goals (SDGs), Bangladesh achieved 100% access to sanitation by 2015 mostly by on-site sanitation systems (OSSs). The major drawbacks of the OSSs are the deposition of the Faecal Sludge (FS) underground and environmental pollution due to the indiscriminate disposal of FS. As an overpopulated country, 40% out of 162 million people live in urban areas. However, the national planning process; the Five-Year Planning (FY 2016-20) did not put emphasis on the Faecal Sludge Management (FSM). Major policies also did not address FSM though there are various policies relevant to promote safe sanitation. Against this backdrop, it is difficult to manage the second-generation sanitation challenge like FSM services for the enormously growing urban population. However, to achieve the target of sustainable sanitation (SDG 6.2), the country needs much attention to address the FSM services with a huge public investment to build necessary infrastructures and initiate service delivery by involving stakeholders. This study investigated the role of public finance in addressing urban FSM services in two urban centers: Dhaka and Faridpur. The current public financing addressed FSM service for 39% of inhabitants in Faridpur; while in Dhaka, FSM service is very negligible and Dhaka Water Supply and Sewerage Authority (DWASA) is facilitating only the emptying service by engaging the private enterprises and NGOs shows a resource gap for FSM financing. Lack of institutional coordination, role clarity on service delivery, service provisioning, capacity, leadership, and inappropriate resource sharing among the utilities are the key challenges. The study has drawn a set of public financing mechanisms to achieve urban FSM service.