In a crucial meeting between private bank owners and the Finance Adviser of the interim government, the Bangladesh Association of Banks (BAB) raised concerns over past governmental interference in the banking sector, which they claim contributed to the unchecked rise of oligarchs like S Alam.
As per newspaper reports published on Friday, the plea from the banking sector is clear – the interim government must restrain the evil forces in the banking sector from issuing unlawful directives that favour a few, allowing them to amass excessive power at the cost of transparency and accountability.
We know the concern about fostering new oligarchs is not unfounded. For too long, political influence over banking decisions has been a defining feature of Bangladesh’s financial landscape.
The creation of tycoons who wield excessive control over capital can distort competition and economic stability.
The calls for a sound lending policy resonate with the broader needs of the banking industry. Many banks are struggling with liquidity crises and an increasing number of non-performing loans.
The unchecked flow of loans to favoured individuals has led to financial haemorrhaging, leaving banks vulnerable and ordinary borrowers struggling to access credit.
In this context, the BAB’s demand for a more rigorous vetting process in loan disbursement is crucial. Loans must be extended based on reality, not political influence, with due diligence to ensure repayment.
The BAB’s suggestion to seek financial support from institutions like the World Bank and IMF to stabilize troubled banks reflects the severity of the liquidity crisis.
While foreign aid might offer temporary relief, it is not a sustainable solution.
The key lies in systemic reforms prioritising accountability at all banking sector levels.
The interim government’s move to dissolve and reconstitute the boards of 11 banks is a step in the right direction.
However, further action is necessary to address the sector’s structural weaknesses.
Implementing the BAB’s suggestions, such as increasing loans to small and medium enterprises, will ensure that capital reaches those who need it most, fostering inclusive economic growth.
Most critical now is that all stakeholders – government, regulators, and private bank owners – commit to reforms prioritising governance, transparency, and accountability.
We must say that the lessons of the past are clear: when a banking sector becomes a tool for political favour, the entire economy suffers.