[🇧🇩] Banking System in Bangladesh

Source: https://thefinancialexpress.com.bd/views/bank-mergers-navigating-challenges-seizing-opportunities

Bank mergers: navigating challenges, seizing opportunities
MD. TOUHIDUL ALAM KHAN
Published :
Apr 08, 2024 22:03
Updated :
Apr 08, 2024 22:03

In the ever-evolving landscape of Bangladesh's financial sector, a profound transformation is underway, driven by strategic mergers guided by the Bangladesh Bank. These mergers represent a pivotal moment, promising to reshape the banking industry's future while addressing pressing challenges. However, beneath their surface lies a complex interplay of factors that demand a comprehensive understanding and strategic navigation.

Think of two banks standing at opposite ends of a spectrum: one embodies strength, stability, and resilience, while the other grapples with weaknesses and vulnerabilities, struggling against the tides of economic uncertainty. As the Bangladesh Bank issues directives for a merger, its aim is clear: to build a unified entity that harnesses the strengths of both while mitigating their weaknesses. This endeavour holds immense promise, but it also poses significant challenges that warrant careful consideration and meticulous planning.

At the heart of bank mergers lies the issue of stability. By integrating weaker banks with their stronger counterparts, the overarching goal is to reinforce the financial sector's foundation, making it more robust and resilient in the face of market volatility. Stronger banks bring to the table a wealth of resources, including robust risk management practices and substantial capital reserves, which serve as a bulwark against systemic risks. However, achieving this stability is contingent upon navigating valuation intricacies and overcoming integration hurdles.

Operational efficiency stands as another cornerstone of bank mergers. Through consolidation, banks aim to streamline their operations, eliminate redundancies, and optimise resource utilisation. This not only translates into cost savings but also fosters a culture of efficiency and innovation within the merged entity. Yet, the path to operational excellence is rife with challenges, particularly concerning the integration of disparate systems, processes, and organizational cultures.

One of the most formidable challenges in bank mergers is cultural integration. Each bank boasts its own unique organisational culture, shaped by its history, values, and operating principles. Merging these distinct cultures requires finesse, empathy, and effective communication to bridge gaps and foster a sense of unity and purpose within the combined entity. Failure to address cultural disparities can lead to internal friction, hampering productivity and eroding employee morale.

Despite the potential benefits, bank mergers inevitably give rise to concerns. Chief among these is the threat of job losses, as mergers often result in workforce rationalisation and redundancies. To allay fears and safeguard employee interests, the Bangladesh Bank has instituted guidelines mandating job security for employees of merged entities for a stipulated period. While this measure provides a degree of reassurance, it also introduces complexities related to organisational culture and performance management.

Regulatory supervision plays a pivotal role in ensuring the integrity and efficacy of bank mergers. Regulatory bodies must enforce compliance with guidelines and regulations governing mergers to safeguard the interests of stakeholders. This entails conducting thorough due diligence assessments to identify potential risks and issues and implementing legal provisions to hold accountable those responsible for past misconduct, including defaulters and unethical bank employees.

As Bangladesh's banking sector undergoes a profound transformation through mergers and acquisitions, it stands at a crossroads, brimming with both challenges and opportunities. By navigating these challenges with foresight, resilience, and strategic planning, the sector can emerge stronger, more resilient, and better equipped to meet the evolving needs of its customers and drive sustainable economic growth.

Md. Touhidul Alam khan is the Managing Director & CEO of National Bank Limited.​

 

[Saif]

Govt plans to keep only 2 state banks

Bangladesh’s interim government has planned to merge all state banks into two large banks as part of a broader overhaul of a banking sector weakened by years of mismanagement and poor governance, Bangladesh Bank governor Ahsan H Mansur said on Wednesday.

www.newagebd.net

Govt plans to keep only 2 state banks
Staff Correspondent 21 January, 2026, 21:58

Ahsan H Mansur

Bangladesh’s interim government has planned to merge all state banks into two large banks as part of a broader overhaul of a banking sector weakened by years of mismanagement and poor governance, Bangladesh Bank governor Ahsan H Mansur said on Wednesday.

Speaking at a discussion at Jagannath University, Mansur said that the country’s banking landscape has become overcrowded and difficult to supervise.


Bangladesh now has 61 banks, far more than the economy requires, and the number should be reduced sharply by consolidation.

In his view, 10 to 15 banks would be sufficient to meet the country’s needs while allowing regulators to enforce discipline and transparency more effectively.

The governor said that the government intends to merge most of the nine state-owned banks and retain only two banks.

He argued that a smaller number of stronger banks would make it easier to ensure sound governance and prevent the recurrence of long-standing problems that have plagued the sector.

Mansur delivered a stark assessment of the damage already done.

He said criminal activities, widespread irregularities, family dominance over bank boards, and weak oversight had pushed the banking sector close to collapse.

Nearly Tk 3 lakh crore has flown out of the system over time, he said, with a significant portion likely laundered abroad.

He further alleged that between $20 billion and $25 billion was siphoned off through family-controlled banking structures, reflecting how concentrated ownership and influence distorted decision-making.

The governor warned that banking decisions must not be driven by personal or individual interests, stressing that the absence of proper governance had eroded public trust and weakened financial stability.

Comprehensive reforms, he said, were urgently needed across regulation, supervision, and ownership structures to restore confidence.

On the issue of default loans, Mansur said that the non-performing loan ratio is expected to decline to around 25 percent by March, signalling some improvement from recent highs.

However, he cautioned that the risk of renewed political interference remains unless the amended Bangladesh Bank Order is enacted.

Without stronger legal backing for the central bank, he said, past patterns of influence could easily return.

To deal with failing institutions, Mansur said that Bangladesh Bank is working to establish a Bank Resolution Fund, which is expected to raise between Tk 30,000 crore and Tk 40,000 crore.

The fund would apply not only to banks but also to non-bank financial institutions, creating a formal mechanism to manage distress without destabilising the wider system.

The governor also highlighted the need to reduce reliance on cash, describing it as a major channel for revenue leakage.

He said that moving towards a cashless system could increase annual government revenue by Tk 1.5 lakh crore to Tk 2 lakh crore.​

 

[Saif]

Banking sector reforms unavoidable to restore stability: FE Editor

Shamsul Huq Zahid, Editor and CEO of The Financial Express, on Saturday emphasised the urgent need to stabilise the country’s banking sector to support economic recovery and put growth back on an upward trajectory. Speaking at the MTB–FE roundtable titled “Banking Sector Reforms&

thefinancialexpress.com.bd

Banking sector reforms unavoidable to restore stability: FE Editor

FE Online Report
Published :
Jan 22, 2026 22:50
Updated :
Jan 22, 2026 23:00

Shamsul Huq Zahid, Editor and CEO of The Financial Express, on Saturday emphasised the urgent need to stabilise the country’s banking sector to support economic recovery and put growth back on an upward trajectory.

Speaking at the MTB–FE roundtable titled “Banking Sector Reforms” at Six Seasons in Dhaka city, organised by The Financial Express, he said reforms are often talked about when things go wrong, but are usually avoided as they tend to be painful. However, given the current condition of the banking sector, he noted that comprehensive reforms have now become unavoidable.

Mr Zahid said that although problems in the sector had long been suspected, the true picture remained concealed as some banks resorted to manipulating their financial statements. Recent disclosures, however, have revealed the fragile health of the industry.

He pointed out that many banks and non-banking financial institutions were established over the past one and a half decades on political considerations, resulting in far more institutions than the economy actually needs.

Political interference in the sanction and disbursement of loans—particularly large loans—frequent amendments to the Bank Company Act to benefit certain families and groups close to the then ruling quarters, and regulatory indulgence were cited as key factors behind the sector’s deterioration.

According to Mr Zahid, bank boards, along with some former top officials of Bangladesh Bank and the Financial Institution Division (FID), made it easier for a select group to siphon off banks’ funds, causing massive losses of depositors’ money.

Referring to recent corrective measures, he said Bangladesh Bank, with support from the Ministry of Finance, has taken steps to protect depositors’ interests following the fall of the autocratic regime. These include the merger of five Islami banks into a single entity and ongoing efforts to merge nine non-banking financial institutions, which have helped restore confidence in the financial sector.

Despite these initiatives, he warned that non-performing loans remain alarmingly high, with nearly one-third of total outstanding loans now classified. While the central bank initially adopted a tough stance against large defaulters, it has recently softened its approach to allow major manufacturing units to continue operations and protect thousands of jobs, creating a dilemma for Bangladesh Bank.

Mr Zahid also highlighted the issue of Bangladesh Bank’s autonomy, noting that a proposal to amend the Bangladesh Bank Order is awaiting government approval. He stressed that while legislation is necessary to ensure independence, ending the culture of political interference in the central bank’s affairs is equally important, though difficult to guarantee in the country’s context.

Dr Salehuddin Ahmed, Adviser, Ministry of Finance, attended the discussion event as the chief guest, while Dr Ahsan H Mansur, Governor, Bangladesh Bank, as the special guest.

Dr Shah Md Ahsan Habib, Professor, BIBM, delivered the keynote speech.

The event was chaired and moderated by Mr Shamsul Huq Zahid, Editor and CEO of The Financial Express.

Mutual Trust Bank PLC was the title sponsor of the roundtable, while BRAC Bank PLC and NCC Bank PLC were gold sponsors. Trust Bank PLC, Shahjalal Islami Bank PLC, Eastern Bank PLC, and Mercantile Bank PLC joined as co-sponsors.​

 

[Saif]

Bangladesh Bank requires adequate operational, administrative independence: Finance adviser

Finance Adviser Dr Salehuddin Ahmed has said Bangladesh Bank requires adequate operational and administrative independence to perform its duties effectively. The adviser also pointed out that such autonomy must be balanced with accountability within the sovereign framework of the state. He came u

thefinancialexpress.com.bd

Bangladesh Bank requires adequate operational, administrative independence: Finance adviser

FE ONLINE DESK
Published :
Jan 22, 2026 20:27
Updated :
Jan 22, 2026 20:44

Finance Adviser Dr Salehuddin Ahmed has said Bangladesh Bank requires adequate operational and administrative independence to perform its duties effectively.

The adviser also pointed out that such autonomy must be balanced with accountability within the sovereign framework of the state.

He came up with the statement while delivering an address as the chief guest at the MTB-FE roundtable titled ‘Banking Sector Reforms’, organised by The Financial Express (FE) at Six Seasons Hotel in Dhaka on Thursday.

Dr Salehuddin Ahmed stressed appointing competent leadership in the banking sector through a transparent selection-process.

Dr Ahsan H. Mansur, Governor of Bangladesh Bank, joined the programme as the special guest, while Dr Shah Md. Ahsan Habib, Professor of BIBM, delivered the keynote speech.

The session was chaired and moderated by Mr Shamsul Huq Zahid, Editor and CEO of The Financial Express.

Mutual Trust Bank PLC was the title sponsor of the roundtable while BRAC Bank PLC and NCC Bank PLC were gold sponsors. Trust Bank PLC, Shahjalal Islami Bank PLC, Eastern Bank PLC, and Mercantile Bank PLC were co-sponsors.​

 

[Saif]

undefined | The Financial Express

thefinancialexpress.com.bd

ICC chief slams 'spoon-feeding' of weak banks, demands end to bailout culture

FE ONLINE DESK
Published :
Jan 22, 2026 18:06
Updated :
Jan 22, 2026 20:48

Mahbubur Rahman, President of the International Chamber of Commerce (ICC) Bangladesh, has strongly criticised the practice of providing artificial life support to failing banks, warning that such measures will not resolve the banking sector crisis.

Speaking at the MTB-FE roundtable titled 'Banking Sector Reforms’, organised by The Financial Express (FE) at Six Seasons Hotel in Dhaka on Thursday, Rahman said bankruptcy laws should be allowed to run their natural course instead of using taxpayer money to prop up insolvent institutions.

He questioned the effectiveness of the independent director system, calling it "dependent rather than independent." Rahman cited cases where independent directors remained silent despite witnessing corporate wrongdoing.

The business leader criticised the central bank's Tk 225 billion liquidity support to six troubled banks in November 2024, calling it unsustainable. He also raised concerns about the proposed merger of five Shariah-based banks, questioning whether retired bureaucrats have the expertise to run the Tk 200 billion entity.

Rahman proposed consolidating state-owned banks into just two institutions and urged the finance adviser to legally enshrine central bank autonomy before leaving office. He called for strict action against willful defaulters while supporting genuine businesses in temporary distress.

Mutual Trust Bank PLC was the title sponsor of the roundtable, while BRAC Bank PLC and NCC Bank PLC were gold sponsors. Trust Bank PLC, Shahjalal Islami Bank PLC, Eastern Bank PLC, and Mercantile Bank PLC were co-sponsors.​

 

[Saif]

https://thefinancialexpress.com.bd/economy/bb-seeks-authority-to-override-law-waive-banks-crr-penalties

BB seeks authority to override law, waive banks' CRR penalties
Putting cash reserve ratio discipline on hold as massive streamlining of banking ongoing

REZAUL KARIM
Published :
Jan 24, 2026 00:17
Updated :
Jan 24, 2026 00:17

Bangladesh Bank moves to bolster its regulatory authority to waive, remit, or reduce penalties for banks' Cash Reserve Ratio (CRR) shortfalls in special circumstances as the central bank oversees the largest bank-consolidation effort in nation's history.


To this end, sources say, the central bank governor, Dr Ahsan H. Mansur, has sent a proposal to the finance adviser and financial institutions (FID) secretary to take step for inserting a new sub-clause into Article 36 of the Bangladesh Bank Order 1972.

This sought-after prowess would allow the banking regulator to relax CRR-related penalties under special circumstances, overriding existing statutory provisions, they add.

Under the proposed amendment, notwithstanding the provisions of sub-sections (4), (5), (6), and (7), the BB Board may---upon an application by a scheduled bank or banks and in the interest of ensuring financial stability, protecting depositors' interests and maintaining public confidence in the banking system-fully or partially waive, remit, or reduce any penalty imposed or imposable under the section.

This discretionary relief may be granted if the bank concerned or banks are facing one or more of the following circumstances: liquidation, merger, amalgamation, acquisition, restructuring or the transfer of any assets, liabilities, or shares of a scheduled bank or banks by Bangladesh Bank under any applicable law, as well as the suspension or closure of the business of a scheduled bank or banks pursuant to applicable laws or by order of BB.

Under the existing legal framework, scheduled banks are subject to daily penalties for failure to maintain the mandatory CRR.

Policymakers, however, argue that for weak, loss-making, or restructuring banks, such penalties often aggravate financial stress rather than enforce discipline, making recovery more difficult.

In particular, banks undergoing mergers, acquisition, transfer of assets and liabilities, or regulatory restructuring find it almost impossible to maintain regular CRR compliance, as liquidity pressures intensify during transition periods.


They say the potential CRR-waiver power is directly related to the merger process and other restructuring efforts.

They believe continued enforcement of strict CRR penalties on banks under merger could undermine the financial base of the newly formed entity and weaken depositor confidence at a critical stage of consolidation.

Against this backdrop, bankers believe granting the central bank controlled, situation-specific discretion to ease penalties has become essential to ensure an orderly resolution of distressed banks.

According to a BB official, the proposal was placed at its 485th meeting and approved by the BB board directors of BB. It has been forwarded to the Finance Adviser and FID for legal vetting and further processing.

He says the exemption would be considered on a case-by-case basis, subject to applications submitted by the banks concerned.

One finance official has said, "We have received a proposal from the central bank and now are scrutinising."

Banking-sector experts think the move will strengthen BB's ability to manage orderly resolution of distressed banks amid consolidation efforts.

However, they caution that discretionary powers to waive penalties must be exercised with transparency and strict oversight, to avoid creating moral hazard in the banking sector.

Once enacted, the amendment is expected to provide the central bank with an important legal instrument for crisis management, particularly as bank mergers and restructuring gain momentum.


This regulatory flexibility comes at a time when the central bank has taken step to restructure the banking sector by merging five crisis-hit Islamic banks - First Security Islami Bank, Global Islami Bank, Social Islami Bank, Union Bank and EXIM Bank - into a single new one.

The newly formed Sammilito Islami Bank PLC received final approval from BB and began operations on December 02, 2025, emerging as the largest Shariah-based bank in the country.

The merger is part of a wider reform strategy to enhance governance, restore depositor confidence, and reduce systemic risk in a segment of the banking sector that has struggled with high levels of defaulted loans and liquidity pressures.

Under the resolution scheme, depositors in the merged banks will have their account balances recalculated based on status as of late December 2025, and no profit will be paid on deposits for the years 2024 and 2025.​