Banking Crisis, Debt Burden Threaten Economic Stability: Mahbub Ullah

National Professor Mahbub Ullah has warned that most banks in Bangladesh might have ceased to exist if market principles had been strictly applied, highlighting the challenges facing the country's banking sector.

Speaking at the opening session on the second and final day of the Annual Banking Conference organised by the Bangladesh Institute of Bank Management (BIBM) in Mirpur, Dhaka, on Thursday, he expressed concern over continued efforts to keep struggling banks afloat despite a serious loss of public confidence.

According to Mahbub Ullah, only four or five banks are currently operating effectively and maintaining sound banking practices. He said these institutions could offer valuable lessons for addressing the sector's ongoing problems.

He described Bangladesh's economic system as increasingly dominated by a small group of wealthy and influential business figures, commonly known as oligarchs. He argued that state policies and decisions had contributed to the rise of these groups, often at the expense of ordinary citizens.

Mahbub Ullah questioned the long-term effectiveness of measures to keep troubled banks operational, warning that such interventions could deepen economic problems if their underlying weaknesses remained unresolved.

He called for greater attention to the management practices and operational standards of well-performing banks when formulating banking reforms.

The professor also rejected the notion that economic recovery depended on accommodating powerful business interests, warning that the country's economic difficulties could worsen if policymakers failed to exercise caution in dealing with influential groups.

Turning to the broader business environment, Mahbub Ullah criticised the lack of adequate support for the private sector. He said businesses were struggling to access credit, raising concerns about the potential impact on investment and economic activity.

He also expressed concern over the country's growing debt obligations, questioning whether the government would be able to meet future repayment and interest costs without putting additional pressure on the economy.

On privatisation and governance, Mahbub Ullah said a fundamental problem was the failure of those in power to recognise the state as a public institution serving its citizens.

He argued that successive political and administrative practices had often treated state resources as personal or private assets, allowing benefits to be distributed among supporters, relatives and close associates rather than managed for the public good.

The session also featured a keynote presentation by Barkat-e-Khoda, a former economics professor at the University of Dhaka. BIBM Professor Shah Md Ahsan Habib delivered the welcome address.