Bangladesh: Bangladesh Bank Governor Dr Ahsan H Mansur on Wednesday indicated that the country requires only 10 to 15 banks for its economy, highlighting a strategic shift towards restructuring the congested financial sector.
According to United News of Bangladesh, Dr Mansur, speaking at a seminar titled ‘Banking Sector: Current Challenges and Future Prospects’ at Jagannath University, unveiled a proposal to consolidate the number of state-owned banks to two by implementing strategic mergers. The Governor noted that the current total of 61 banks in Bangladesh exceeds necessity and that reducing this number could facilitate better governance.
Dr Mansur critically assessed the current state of the banking sector, citing issues such as ‘malpractice, irregularities, and family-based control,’ which have jeopardized the industry’s stability. He estimated that around Tk 3.0 lakh crore has been illicitly diverted from the banking system, with a substantial amount potentially laundered overseas. He reported that between $20 billion and $25 billion was smuggled out of the country via family-controlled banking networks.
He emphasized the need for vigilance against individual-centric decision-making in the banking sector, stressing that immediate reforms are essential to prevent further decline. Despite the challenges, the Governor expressed optimism about reducing the Non-Performing Loan (NPL) ratio to 25 percent by March.
To assist struggling institutions, Bangladesh Bank is developing a Bank Resolution Fund with a target amount of Tk 30,000-40,000 crore, which will support both banks and non-bank financial institutions (NBFIs). Dr Mansur also underscored the importance of moving towards a cashless society to combat tax evasion, estimating that such a transition could yield an additional Tk 1.5-2.0 lakh crore in annual revenue. He advocated for the early integration of students into the banking network.
The Governor cautioned that political interference continues to pose a threat to the banking sector unless a revised Bangladesh Bank Ordinance is introduced. The seminar also featured remarks from Jagannath University Vice-Chancellor Professor Dr Rezaul Karim and Economics Department Chairman Professor Dr Sharif Mosharraf Hossain, who reiterated the necessity for stricter monitoring and recovery measures in the vulnerable banking sector of Bangladesh.