Banking sector reform not possible overnight

Business Desk :

He said that due to long-standing accumulated weaknesses and irregularities, it is not realistic to complete meaningful reforms in this sector in a short time.
The country’s banking sector is currently going through a deep structural crisis, said Finance Adviser Dr Salehuddin Ahmed. He further said that due to long-standing accumulated weaknesses and irregularities, it is not realistic to complete meaningful reforms in this sector in a short time.
He said these at a roundtable meeting titled “Banking Sector Reform” jointly organized by Mutual Trust Bank (MTB) and Financial Express at a hotel in the capital on Thursday .
The Finance Adviser said: “The banking sector is definitely challenging. Many institutions have become weak. There is a tendency to ignore laws and regulations. In many cases, the owners themselves control the management without paying attention to the rules and regulations.”
He mentioned that the crisis and irregularities that have accumulated in the banking sector in the last 15 years cannot be resolved in just 14 to 16 months. He also commented that these problems are very deep and complex.
Regarding the autonomy of Bangladesh Bank, Dr. Salehuddin Ahmed said: “Autonomy is essential in the management of the activities of the central bank, but complete independence without accountability is neither realistic nor desirable.”
He also said that no central bank can operate beyond the sovereignty of the state; there must be accountability with autonomy.
Citing international assessments, the adviser said that recent global reports have identified money laundering, trade-related crimes and inflation as major risks for countries like Bangladesh.
He also mentioned that these issues directly affect the stability of the banking system. He opined that Bangladesh Bank, with the support of the Ministry of Finance, has to play an important role in this regard.
Dr. Salehuddin, harshly criticizing the audit system, said that many chartered accounting firms have signed audit reports without proper scrutiny.
He said: “Some auditors have severely damaged financial discipline by signing backdated or questionable reports.” He also said that some audit firms have already been blacklisted due to this.
Stating that irregularities are not limited to the banking sector, he said that major financial activities in other sectors, including higher education, are also going beyond proper audit in many cases, which is worrying.
Regarding legal reforms, the finance adviser said that the government has recently amended the Negotiable Instruments Act and the House Building Finance Corporation Act. In addition, work is underway to amend the Prevention of Money Laundering Act and the Money Loan Court Act.
However, he mentioned the lack of time as a major challenge.
“We have very little time. Still, we are trying to take forward the reform activities as much as possible.”
He also said that steps have already been taken to bring the number of additional senior officials to a reasonable level as part of the structural reforms of Bangladesh Bank.
Despite all these challenges, the adviser commented that Bangladesh’s image in the international arena is still positive. “The perception of outside countries is not that Bangladesh is collapsing. However, development partners say that the current situation is quite difficult.”
Stating that banking sector reforms are essential for the economy, he said: “This opportunity should not be wasted. If we cannot complete all the reforms now, then the next government must take them forward. Considering the importance of the banking sector, there is no room for delay in these reforms.”
Bangladesh Bank governor Dr Ahsan H Mansur was present as special guest at the event.
Bangladesh Institute of Bank Management (BIBM) Prof Shah Md. Ahsan Habib presented the keynote address.