The Governor of Bangladesh has identified governance failure as the foremost challenge facing the country’s banking sector. Speaking at a recent economic forum, he remarked that numerous loans were issued under the influence of government directives or powerful individuals and families, a practice compounded by the negligence of regulatory bodies, including Bangladesh Bank.
“The primary reason for the current fragility of our banks is the excessive control exercised by private ownership,” the Governor explained. He cited the example of five Islamic banks which, despite being consolidated in practice, remained under individual control. A lack of robust checks and balances has reportedly resulted in the outflow of nearly BDT 3 trillion from the national economy, inflicting significant damage.
He further noted, “Although banking ranks third globally among major economic sectors, in Bangladesh it occupies a dominant position. This imbalance has placed other financial sectors at a disadvantage. We must implement long-term strategies and effective programmes to restore strength and stability to the banking sector.”
Expressing concern over the proliferation of banks in the country, the Governor suggested that a mere 10 to 15 banks would be sufficient to serve the nation effectively. Currently, Bangladesh has 64 operational banks, which has led to administrative complexities and elevated operational costs. Reducing the number of banks would, he argued, lower costs and enhance profitability. For comparison, he highlighted that the revenue of a single Singaporean bank equals the combined income of all banks in Bangladesh.
The following table summarises the situation in Bangladesh alongside selected international benchmarks:
| Aspect | Bangladesh | Singapore (Example) | Remarks |
|---|---|---|---|
| Number of banks | 64 | 1 | Excess banks increase administrative expenditure |
| Total financial loss | ≈ BDT 3 trillion | – | Weak checks and balances caused massive outflow |
| Banking sector ranking | 1st | 3rd | Dominance affects other economic sectors |
| Recommended number of banks | 10–15 | 1 | Fewer banks would improve profitability |
Professor Dr Rezaul Karim, Vice-Chancellor of Jagannath University, lauded the Governor’s efforts in rebuilding the banking sector, stating: “Despite years of mismanagement, the sector is now gradually recovering. With enhanced oversight and greater awareness among students and stakeholders, positive developments are taking root.”
The event was also attended by Professor Dr Mahbub Ullah, convener of the Economics Association, and Dr Mohammad Helal Uddin, Member Secretary, both of whom emphasised the urgent need for decisive measures to address the banking sector’s crisis and ensure sustainable reform.