Bankers Seek Legal Reforms to Combat Asset Looting

The Bangladesh Association of Banks (BAB) has formally appealed to the interim administration to introduce more rigorous financial legislation to recover non-performing loans (NPLs). Private bank owners stated that tougher laws are required to address structural vulnerabilities left by widespread financial irregularities under the previous political regime.

The proposals were presented during an official consultative session with the Finance Minister, Amir Khosru Mahmud Chowdhury, at his ministry secretariat office in Dhaka, ahead of the upcoming national budget.

Proposed Legislative Adjustments for Loan Defaulters

The BAB delegation, led by Chairman Abdul Hai Sarker, engaged in an extensive dialogue with the Finance Minister regarding systemic vulnerabilities in the banking sector. Following the session, Mr Sarker expressed confidence that legislative tightening would drastically improve the balance sheets of commercial banks.

“If the government toughens the laws, at least 60 per cent of bad loans can be recovered very easily,” Mr Sarker noted during a post-meeting brief.

The bank owners submitted specific legal demands to streamline recovery processes:

• Mandatory Physical Presence: The BAB urged the creation of a law making the physical presence of accused loan defaulters mandatory within the court dock. Currently, defaulters are permitted to remain absent by allowing legal counsel to represent them. The BAB argued that this loophole allows individuals who have fled abroad to avoid repayment while their representatives deliberately delay judicial proceedings.

• Governance Reforms: The delegation called for statutory amendments to restrict the maximum number of members from a single family permitted to serve simultaneously as directors on a bank’s board.

Inward Investment and Corporate Tax Modernisation

Prior to the banking delegation’s arrival, Finance Minister Chowdhury held a separate meeting with representatives from the Foreign Investors’ Chamber of Commerce and Industry (FICCI). Led by its President, Rupali Haque Chowdhury, the chamber discussed the investment climate and fiscal priorities for the National Budget for Financial Year 2026–27.

The FICCI delegation stressed that attracting higher volumes of Foreign Direct Investment (FDI) requires a predictable, transparent, and consistent policy environment. They proposed a long-term budgetary roadmap to enable multinational corporations to project tax structures accurately before committing capital.

Furthermore, Ms Chowdhury drew attention to the disparity between nominal and effective corporate tax rates in Bangladesh. She pointed out that while nominal rates might appear competitive, the effective tax rate remains excessively high due to administrative hurdles and various non-deductible business expenses. The chamber advocated for broadening the national tax base rather than increasing the fiscal burden on existing compliant taxpayers.

Corporate Dialogues and Key Ministerial Assurances

The Finance Minister assured both industry groups that the government would prioritise transparency, corporate discipline, and international best practices.

The Finance Ministry confirmed that the issues raised during these sessions would be integrated into the budgetary planning for FY 2026–27. The FICCI delegation also included Senior Vice-President Deepal Abeywickrema and Vice-President Mohammad Iqbal Chowdhury, along with other board directors.