Keep banking sector free from ruling quarters: Prof Wahiduddin 

Bangladesh must prevent interference of ruling quarters in banking, ensure that new loans reach genuine businesses and introduce stronger safeguards against misuse of public money if it wants to restore confidence in the banking sector, economists and banking leaders said on Wednesday.

Speaking at the opening of the two-day 11th Annual Banking Conference at the Bangladesh Institute of Bank Management (BIBM) in Mirpur, they warned that weak loan recovery, poor governance and past financial abuses had left the banking system under severe pressure.

Distinguished economist Wahiduddin Mahmud, former professor of economics at Dhaka University and a former adviser to the interim government, said Bangladesh had moved from a culture of loan default to what he described as a culture of bank plundering after 2010.

Bank reforms must to stop political interference and fresh plundering, speakers at 11th Annual Banking Confce

He said earlier reforms had helped improve the standards of private banks, but the easing of banking rules over the past 15 years had contributed to the present crisis.

Wahiduddin questioned whether the authorities could ensure that new loans were being used properly, particularly as banks were receiving permission for various relaxations to deal with their problems.

He said weak banks might need support and some relaxation of rules to recover, but strict safeguards were essential to ensure that the money reached honest entrepreneurs and genuine businesses.

“Where is the guarantee that the same mistakes will not be repeated?” was the central concern behind his warning.

He also called for rules to prevent a single group or family from gaining control of several banks. He said 
Bangladesh needed an anti-trust or anti-monopoly law to address excessive concentration of ownership and control.

State-owned banks, he added, should not be used as tools for political patronage. Political governments must take responsibility for stopping the practice of using the banking system to distribute benefits for political reasons.

Dr Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh (PRI), presented the keynote paper on coordination among banking, monetary, fiscal and trade policies.

Sattar said macroeconomic stability required better coordination among these policies. He argued that heavy government borrowing from domestic sources was limiting the effectiveness of monetary policy.

He proposed a policy mix in which monetary policy would focus on controlling inflation, fiscal policy would support economic growth, and a flexible exchange-rate policy would help the economy adjust to external pressures.

Sattar also suggested reducing import tariffs to help offset the effects of the taka's depreciation since May 2022. Such an approach, he argued, could help ease inflationary pressure while supporting export and import growth.

The message was that monetary tightening alone would not be enough to address Bangladesh's economic challenges.
Abdul Hai Sarker, chairman of the Bangladesh Association of Banks (BAB) and Dhaka Bank, called for major reforms to the judicial and enforcement systems to make defaulting borrowers repay their loans.

He said the economy was facing pressure from a weakening current account balance, sluggish private investment and a huge stock of bad loans.

Conventional legal procedures were too slow to deal with the scale of the problem, he said, stressing the need for faster and more effective enforcement.

Sarker also cautioned against copying foreign regulatory models without considering Bangladesh's economic conditions. Reforms, he said, should reflect the country's own stage of development and institutional weaknesses.

Mashrur Arefin, managing director and chief executive officer of City Bank and chairman of the Association of Bankers, Bangladesh (ABB), said the period of widespread bank plundering had ended.

He stressed the need for banking policies that would allow genuine businesses and industrial entrepreneurs to obtain financing while protecting banks' ability to operate safely.

Jean Pesme, World Bank division director for Bangladesh and Bhutan, also spoke as a special guest. He highlighted the importance of reviewing banks' assets and controlling defaulted loans, according to reports from the conference.

Bangladesh Bank Deputy Governor Md Kabir Ahmed was among the other special guests.

The conference comes as Bangladesh's banking sector continues to struggle with bad loans, capital shortages and concerns about governance. A BIBM study presented earlier this month put the gross non-performing loan ratio at 33.2 per cent in June 2026, underlining the scale of the problem.

For businesses, weak banks mean less reliable access to credit. For ordinary depositors, the crisis raises concerns about the safety of their savings. For the wider economy, poor lending decisions can weaken investment, employment and growth.

The conference will continue on Thursday, with 13 plenary sessions and presentations of 104 research papers planned over the two days. More than 800 bankers, policymakers, academics, researchers and students from home and abroad are expected to take part.

Bangladesh Bank Deputy Governor Kabir Ahmed explains that Bangladesh’s recent crisis followed a clear chain: external shocks depleted reserves, exchange-rate pressure increased, corporate-sector stress rose, and that stress translated into banking-sector risk. 

Non-performing loans increased, capital weakened, provisioning capacity declined, credit growth slowed, and economic growth suffered. Bangladesh Bank’s immediate response was to rebuild foreign-exchange reserves and maintain exchange-rate stability. The bank rebuilt reserves to roughly six months of import cover before the Iran�"US conflict and avoided purchasing dollars during the conflict, helping preserve exchange-rate stability.
Kabir Ahmed’s central policy position is that the banking sector must now be repaired because banks are the principal suppliers of capital to the real economy.