Staff Reporter :
The banking sector in the country has become monopolized due to a decline in governance, with financial oligarchs under crony capitalism using the sector to achieve their goals, according to Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD).
Speaking at a dialogue titled “What Lies Ahead for the Banking Sector in Bangladesh?” organized by the CPD at a city hotel on Thursday, Dr. Khatun emphasized the critical role of the banking sector in the country’s development.
“The country’s financial sector depends on banks. The role of this sector is the most important in the development of the country. But fragility has appeared in that banking sector. There has been a loss of good governance and accountability,” she said.
Dr. Fahmida Khatun pointed out that loan approval, rescheduling, write-off, and foreclosure are being handled whimsically within banks.
She further criticized the central bank for not acting independently due to external pressures.
“The central bank is not acting independently under external pressure not on their will. This situation should be changed,” she asserted.
The dialogue saw the participation of notable figures including Deputy Leader of the Opposition in the Bangladesh Parliament, Barrister Anisul Islam Mahmud, and Chairman of the Parliamentary Standing Committee on the Ministry of Planning, M A Mannan, who were present as special guests.
The event also saw participation from notable experts, including former Governor of Bangladesh Bank Dr. Salehuddin Ahmed, Executive Director of the Policy Research Institute of Bangladesh (PRI) Dr. Ahsan Habib Mansur, former Chairman of the Association of Bankers, Bangladesh Limited (ABB) Mohammed Nurul Amin, Vice President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Arshad Jamal (Dipu), and journalist and adjunct professor at the Department of Journalism and Media Communication of Green University, Syed Ishtiaque Reza.
CPD Distinguished Fellow Professor Mustafizur Rahman presided over the session, while CPD Executive Director Dr. Fahmida Khatun delivered the keynote speech.
In her presentation, Dr. Khatun highlighted the alarming rise in non-performing loans (NPLs), revealing that their total volume has more than tripled over the last decade—from Tk 42,725 crore in the fourth quarter of fiscal year 2011-12 to Tk 1,45,633 crore in the second quarter of FY24. She noted that the actual amount of NPLs would be significantly higher if loans in specially mentioned accounts, under court injunctions, and rescheduled loans were included.
Dr. Khatun emphasized the critical need for restoring good governance and accountability within the banking sector, which she described as essential for the country’s economic development.
She criticized the whimsical handling of loan approval, rescheduling, write-off, and foreclosure processes in banks, and called for the central bank to operate independently, free from external pressures.
During the dialogue , veteran politician and Deputy Leader of the Opposition in Parliament, Anisul Islam Mahmud, voiced strong criticism of the Bangladesh Bank’s performance.
He described the central bank as a “useless organization” that is unable to implement its policies effectively.
The veteran politician highlighted the disparity between the central bank’s directives and actual practice, citing the fixed USD rate at Tk 117 under the International Monetary Fund’s (IMF) crawling peg system.
“You [central bank] have fixed the USD rate at Tk 117 as per the IMF direction, but if we go to the bank, LCs cannot be opened below Tk 120. That means no one is following the central bank’s instructions,” he said.
Addressing the issue of defaulted loans, Anisul Islam Mahmud noted that while it is a global problem, the way it is handled in Bangladesh is problematic.
“Suddenly one morning it will be announced that ten banks are in trouble. It is not the right way, because the country’s banking sector problems are not new.
It has been discussed for many years, so my complaint against the Bangladesh Bank is that it is not performing as a regulatory authority,” he stated.
He provided the example of Basic Bank, questioning the lack of action despite widespread knowledge of its deteriorating condition.