A sweeping structural overhaul is being signalled in Bangladesh’s banking sector, with policymakers moving to reconstitute the boards of directors of 22 banks across both the state-owned and private segments. The initiative is aimed at strengthening governance, transparency, accountability, and operational efficiency in the aftermath of recent political transitions, according to officials familiar with the process.
Following the political shift on 5 August 2024, the interim administration led by Dr Ahsan H. Mansur assumed responsibility for stabilising the financial sector. Since taking office, the leadership has placed strong emphasis on restoring discipline within the banking system and reinforcing good governance practices. Under this drive, several banks previously had their boards dissolved and restructured, while discussions were also initiated regarding potential mergers among weaker institutions.
Subsequently, proposals emerged to consolidate a number of Islamic banking entities under a unified framework. However, these proposals sparked debate across different quarters, particularly amid allegations that some newly formed boards included individuals previously associated with governance concerns and potential conflicts of interest.
Against this backdrop, the current administration has revived the reform agenda, with renewed priority given to restructuring bank leadership. The Ministry of Finance and the central bank are jointly reviewing the governance structures of 22 commercial banks. Where deficiencies are identified, authorities may proceed with the complete dissolution and reformation of existing boards.
Experts argue that, given the banking sector’s critical role in national economic stability, the selection of competent and ethical leadership is essential. They emphasise that effective boards must be capable of overseeing risk management frameworks, curbing irregular lending practices, and aligning operations with international regulatory standards.
At present, Bangladesh has 61 scheduled banks. If restructuring is implemented across 22 of them, it would potentially affect nearly one-third of the entire banking sector’s governance structure. Analysts suggest that such a large-scale intervention could significantly reshape the financial landscape, potentially improving institutional discipline but also posing transitional risks if not carefully managed.
Overview of Proposed Banking Sector Reforms
| Aspect | Current Status | Proposed Change |
|---|---|---|
| Total scheduled banks | 61 | 22 under review |
| Board status | Existing boards in operation | Possible full reconstitution |
| Regulatory focus | Routine supervision and partial reform | Enhanced governance and transparency reforms |
| Coordinating authorities | Central bank and Ministry of Finance | Joint oversight and implementation |
| Priority areas | General management oversight | Risk control and leadership quality |
Industry analysts further caution that reforms based solely on administrative or political considerations may not yield sustainable outcomes. Instead, they stress the importance of appointing board members with proven professional competence and international banking experience. Without such measures, they warn, vulnerable institutions may continue to struggle with asset quality deterioration and weak internal controls.
A spokesperson for the central bank has stated that no formal announcement has yet been made. However, preliminary assessments and internal consultations are reportedly underway, with visible progress expected in the near future.
Overall, the proposed restructuring of 22 banks marks a potentially significant turning point for Bangladesh’s financial sector. While the initiative is widely viewed as a step towards improved governance and stability, its success will ultimately depend on the transparency, impartiality, and effectiveness of its implementation.