[🇧🇩] Banking System in Bangladesh

[Saif]

Bridging banking divide for balanced growth

The issue of disparity between the rich and the poor, as well as between urban and rural areas, is a frequent topic of discussion, especially in seminars and academic forums. Today's reliance on the market system has only exacerbated this economic imbalance by disregarding the interest of the non-c

thefinancialexpress.com.bd

Bridging banking divide for balanced growth

Published :
Jun 16, 2025 00:17
Updated :
Jun 16, 2025 00:17

The issue of disparity between the rich and the poor, as well as between urban and rural areas, is a frequent topic of discussion, especially in seminars and academic forums. Today's reliance on the market system has only exacerbated this economic imbalance by disregarding the interest of the non-competitive people. A recent Financial Express report brings to light yet another dimension of this divide. Citing data from Bangladesh Bank, the report reveals a disturbing disparity in bank loan disbursement: while over 68 per cent of the population resides in rural areas, only 8 per cent of total bank credit is directed there. This stark imbalance not only reflects skewed development priorities but also entrenches structural inequalities by depriving rural enterprises of vital financial support.

In the absence of bank loans or due to the difficulty in accessing them, microfinance institutions (MFIs), particularly non-governmental organizations (NGOs), have become a primary source of credit in rural areas. Despite the relatively high interest rates charged by NGOs, rural borrowers often turn to them due to the unavailability of credit from traditional banks or the stringent conditions imposed by formal financial institutions. Although MFI interest rates have declined in recent years due to increased competition among microlenders in rural regions, interest rates on microcredit are still considerably higher than those offered by banking channels. These high-cost loans drive up production costs and undermine the competitiveness of rural entrepreneurs.

Meanwhile, although the prevalence of mahajans or loan sharks has decreased following the expansion of MFIs, moneylenders have not disappeared. In many areas, rural borrowers continue to turn to informal lenders to meet urgent financial needs, largely due to limited access to formal banking services. A recent research report by the Bangladesh Institute of Development Studies (BIDS) reveals that moneylenders charge an average interest rate of 145 per cent. Despite such exorbitant rates, 20-30 per cent of rural borrowers still rely on moneylenders, while around 50 per cent obtain loans from NGOs.

This limited access to formal banking channels in rural Bangladesh is not merely a matter of inadequate banking penetration - it poses a serious threat to the very notion of balanced and sustainable development. When rural clients are systematically excluded from access to capital, it stunts their economic potential and limits opportunities for upward mobility. Growth becomes increasingly urban-centric, while poverty and underemployment become deeply entrenched in the countryside. Farmers and rural entrepreneurs, who play a vital role in the national economy, are left to grapple with persistent financial challenges - often worsened by natural disasters such as floods. Strengthening credit availability at reasonable rates is, therefore, essential to easing these constraints and promoting sustainable development in rural areas.

To this end, long-term policies must be adopted that prioritise rural financial inclusion and ensure that credit reaches underserved populations effectively. Financial institutions - both banks and NGOs - need to simplify loan procedures by minimising paperwork and tailoring requirements to the realities of rural borrowers. Encouragingly, mobile financial services (MFS) and agent banking have begun to transform the financial landscape in rural Bangladesh. These innovations are bringing banking services closer to the doorstep of rural residents, eliminating the need for physical travel to distant branches. Agent banking, in particular, is gaining traction as a viable banking channel. Expanding credit facilities through agent banking and MFS platforms could significantly transform rural access to finance by providing faster, more accessible, and user-friendly services. Ultimately, bridging the rural-urban banking divide is a must for achieving equitable economic growth.​

 

[Saif]

Classified bank loans balloon fast to a record high

Classified loans in Bangladesh's banking industry made a quantum leap by around Tk 750 billion in just three months to a record high as of March, stoking concerns across the sector. With such leaps in the volume of non-performing loans (NPLs), the aggregate hit Tk 4.20 trillion by the end

thefinancialexpress.com.bd

ABSENTEE BIG ACCOUNT-HOLDERS, CHANGED ACCOUNTING MAJOR FACTORS
Classified bank loans balloon fast to a record high
NPLs rise by Tk750b in three months to Tk4.20t by March end

JUBAIR HASAN
Published :
Jun 16, 2025 00:32
Updated :
Jun 16, 2025 00:32

Classified loans in Bangladesh's banking industry made a quantum leap by around Tk 750 billion in just three months to a record high as of March, stoking concerns across the sector.

With such leaps in the volume of non-performing loans (NPLs), the aggregate hit Tk 4.20 trillion by the end of March 2025, accounting for 24.13 per cent of the entire loans worth Tk 17.42 trillion disbursed by the country's 61 commercial banks.

Constrained by such a record volume of dud money, banks have become extremely conservative and limit their credit supply to the borrowers. Besides, banks' profitability is also dented as they have to maintain a portion of funds for NPL provisioning.

The country's central bank, Bangladesh Bank (BB), predicts that the rising trend in NPLs would continue in the coming quarters as it revised overdue-status-counting system for term lending to a curtailed tenure of six months from previous nine months.

According to the central bankers, this counting arithmetic will be revised further from March 31, 2025 onwards when such loans will be classified within three months instead of the current six months.

According to the data, the share of classified loans rose to 24.13 per cent of the total outstanding loans during the period under review from 11.11 per cent a year before.

Classified loans include substandard, doubtful and bad/loss of total outstanding credits. Of the classified loans, the share of bad loans was 81.38 per cent or Tk 3.41 trillion.

In terms of the category of banks, the ratio of classified loans in the state-owned commercial banks (SoCBs), like on other occasions, remained high.

During the period, the total amount of NPLs with six state-owned SoCBs rose to Tk 1.64 trillion or 45.79 per cent.

On the other hand, the total amount of classified loans with 43 private commercial banks (PCBs) reached Tk 2.64 trillion or 20.16 per cent until March last.

The NPLs of nine foreign commercial banks (FCBs), on the other hand, rose to Tk 32.38 billion or 4.83 per cent during the period under review.

The classified loans with three specialised banks (SBs), however, rose to Tk 64.94 billion (14.47 per cent) by end of March last from 64.32 billion in Q4 of 2024.

Such faster NPL buildup in banks caused serious concerns to bankers who fear further pressure on their liquidity situation in the months ahead. Managing Director and CEO of City Bank Mashrur Arefin says the rise in the volume of NPLs was expected as a "vicious circle took control of some of the banks and laundered public money from banking system" during the previous regime.

Also were there lots of business accounts opened in the last 15 years by people blessed by the then ruling government. But, after the changeover in state power following the July-August mass uprising, those business accounts went into hibernation in terms of sales turnover or cash-flow generation, which also contributed to the significant rise in the NPLs.

"Moreover, the compliance with international standards of classified- loan recognition as of 31st March played a significant role," he further notes about the reasons why such a spurt in non-performing loans.

Mr Mashrur, also ABB Vice Chairman, feels that the banks here need to understand that it is a business of high credit risk, including the investment risk in capital market. "So, right Credit Risk Management (CRM) framework and Board Risk Management Committee (BRMC) are a must to have."

Managing director and chief executive officer of Mutual Trust Bank (MTB) Syed Mahbubur Rahman says the real picture of NPL in banks started getting exposed in the changed context now.

He feels the volume of dud loans could increase further in the months ahead following implementation of a new classified-loan-counting system.

Apart from steps to ensure governance, the experienced banker suggests that the business-hurting external factors need to be in favour to ensure smooth business operations.

"We need to be more careful in future," he says in an alert note over the rapidly-changing global scenarios affecting trade and business.

Managing director and CEO of the country's largest state-owned lender, Sonali Bank, Md. Shawkat Ali Khan says they have intensified their cash-recovery drive which is a top priority to cut down the burden of NPL significantly.

"And people will see its results in the coming quarters. We want to convert the non-performing loans to performing assets and lend it to CMSMEs. It's our target now--and we'll do it anyhow," he told The Financial Express Sunday.

Currently, Sonali bank has 19-percent NPL, the lowest among the state-owned commercial banks.​

 

[Saif]

Drained deposits worth Tk 190b return in a single month

Currency buildups outside banks are waning fast with the money flowing back into vaults in a latest pivot that gives some respite to the commercial lenders from a crisis-bred liquidity crunch. Out-flowed deposits amounting to Tk 190 billion returned into the banking sector in a month, last April

thefinancialexpress.com.bd

Money changes course back into banks
Drained deposits worth Tk 190b return in a single month

JUBAIR HASAN
Published :
Jun 21, 2025 00:49
Updated :
Jun 21, 2025 00:49

Currency buildups outside banks are waning fast with the money flowing back into vaults in a latest pivot that gives some respite to the commercial lenders from a crisis-bred liquidity crunch.

Out-flowed deposits amounting to Tk 190 billion returned into the banking sector in a month, last April, amid a lax investment regime as well as gradual restoration of confidence in banking operations after a past rout, official data show and analysts believe.

Central bankers and money-market analysts say depositors took away a large volume of their deposits from the banking system during Ramadan and Eid-ul-Fitr, which enhanced the volume of currency outside the banks -- euphemistically called mattress money-- to a record high in March 2025.

But, after the largest religious festival in the Muslim-majority economy was all over, the deposits began changing course back into the banking system in absence of other investment opportunities under the prevailing economic sluggishness, according to them.

According to the latest data available with the central bank, the cache of currency outside banks dropped to Tk 2.77 trillion at the end of April, from the March count of Tk 2.96 trillion.

The deposit outflows from banks had been on stream since October 2024 following reports of gross irregularities in some commercial banks. The amount rose to a record-high Tk 2.96 trillion in March 2025, before a climbdown began with the money changing its course over again.

Seeking anonymity, a BB official says people normally takes away deposits in large volumes ahead of any major festivals, like Eid. Because of the fact, the volume of money outside the banks increased by Tk 250 billion in just a month in March when the country observed Ramadan and Eid-ul-fitr.

"That's why the volume of mattress money rose to Tk 2.96 trillion in March from February's count of Tk 2.71 trillion. After the festival, it dropped to Tk 2.77 trillion in the following month," the official told the FE writer in explaining the latest switch on the money market.

The central banker predicted the figure would increase again in May once the post-Eid data were conflated.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank (MTB), says people probably do not feel comfort in keeping money outside the banks for a long time by taking the current law-and-order situation into consideration.

On the other hand, the experienced banker mentions, banks have been offering relatively better rates for the depositors while the yields on treasury bills and bonds are still lucrative for the investors.

"These factors might attract the deposits that out-flew in recent times to return to the banking system, which is a good sign," the banker adds.

Contacted, Policy Exchange of Bangladesh chairman Dr M Masrur Reaz said there were very limited investment instruments for common people here and this makes them pivot back to banks.

Excepting banks, potential investment areas were savings certificate and capital market. But the share market is unhealthy and putting money in stocks is becoming extremely risky while the rates on savings certificates are not as lucrative as the savers desire.

"That is why people are now returning back to banks, which is a good sign," says Mr Reaz about the turnaround.

The development especially bears significance for happening at a time when the interim government is trying to restore shaken client confidence in banks and putting the banking system back in order through major reforms that include mergers of those weakened through alleged mismanagement and plunder in the past.

The cleanup recipe also includes drives for repatriating funds siphoned off the banks and enterprises as well as freezing suspect bank accounts of runaway or detained tycoons.​

 

[Saif]

No financial liability for banks in contract-based imports: Bangladesh Bank

The Bangladesh Bank has clarified that commercial banks will not bear any financial liability in the case of contract-based imports, in a move aimed at streamlining import procedures and encouraging greater engagement from banks. In a circular issued on Tuesday, the central bank said importers sho

thefinancialexpress.com.bd

No financial liability for banks in contract-based imports: Bangladesh Bank

Published :
Jun 24, 2025 21:01
Updated :
Jun 24, 2025 21:01

The Bangladesh Bank has clarified that commercial banks will not bear any financial liability in the case of contract-based imports, in a move aimed at streamlining import procedures and encouraging greater engagement from banks.

In a circular issued on Tuesday, the central bank said importers should not be restricted from executing import transactions solely on the basis of sales contracts, UNB reports.

The directive comes in response to banks’ longstanding reluctance to handle such transactions, stemming from the misconception that contract-based imports placed the financial burden on them.

The circular explicitly clarifies that banks will be responsible only for managing payment procedures using funds provided by the importers themselves and thereby absolving them of any financial risk.

Insiders see this clarification as a major policy shift, correcting confusion caused by a 2022 circular that led banks to reject contract-based import payments and disrupted import flows.

Industry stakeholders believe the latest move will bolster confidence among banks, simplify import operations, and facilitate a smoother flow of foreign trade.

“This is a timely decision. By clearly stating that banks have no financial liability, it will help reduce import costs and foster a more conducive business environment,” said one importer.​

 

[Saif]

What is the purpose of bank merger?

Hollywood is famous for making thrilling bank heist movies, several of which have earned a place among the best ever made. However, the real-life bank heists that have taken place in Bangladesh are just as astonishing, if not more. Over the past 15 years, hundreds of billions of taka have been siph

thefinancialexpress.com.bd

What is the purpose of bank merger?

SYED MUHAMMED SHOWAIB
Published :
Jun 27, 2025 22:35
Updated :
Jun 27, 2025 22:35

Hollywood is famous for making thrilling bank heist movies, several of which have earned a place among the best ever made. However, the real-life bank heists that have taken place in Bangladesh are just as astonishing, if not more. Over the past 15 years, hundreds of billions of taka have been siphoned off from multiple banks, pushing many to the brink of collapse. Powerful individuals responsible for these embezzlements have reportedly used the money to acquire luxury homes, hotels and businesses abroad, living in opulence while the banks they looted struggle to survive. For a time, the interim government made efforts to recover the lost money. But with little to show, the authorities now seem to have lost interest in the chase.

Now, the same authorities are shifting their focus to merging some of these weak banks under the Bank Resolution Ordinance. Reports suggest that five struggling Islamic banks may soon be consolidated into a large Sharia-based bank, primarily intended to finance small and medium enterprises (SMEs). The government even plans to inject initial capital into this new entity.

But why is the government stepping in to rescue these failing banks, and with taxpayers' money? After all, banks are fundamentally businesses that either profit or incur losses. The key difference is that they operate with other people's money. Like any other business, banks can and do fail. This is a relatively common occurrence in Western financial systems. For instance, in the United States, 568 banks have failed since 2000, averaging 25 closures annually. The worst years were 2010 and 2009, which respectively saw 157 and 104 failures.

Generally, governments refrain from intervening when private banks succeed or fail, as such outcomes are considered part of the risks inherent in private enterprise. Intervention typically occurs only when a bank or financial institution is deemed too big to fail, that is, its collapse would have severe repercussions for the broader economy. A well-known example is Lehman Brothers in the United States. The government's decision not to bail it out triggered a liquidity crisis, widespread panic and a major global economic downturn. In contrast, none of the banks that Bangladesh Bank is now considering for mergers and initial capital support pose such a risk. This naturally prompts the question about the justification for pouring in public funds for their rescue.

Among the five banks slated for merger, four were under the control of the S Alam Group, representing a single business family. They are First Security Islami Bank, Global Islami Bank, Union Bank and Social Islami Bank. The fifth, EXIM Bank, was operated by a businessman closely aligned with the previous government. In Bangladesh, banking regulations limit single-family ownership to 10 per cent of a bank's shares. Yet these individuals found ways around to gain majority control. Once in charge, they are alleged to have siphoned off billions overseas using methods like manipulating trade values where export prices were reported lower and import prices higher than actual.

Collectively, these banks hold Tk1.45 trillion in deposits but have loaned out Tk 2.15 trillion, covering the shortfall by borrowing from Bangladesh Bank and other sources. A large portion of these loans went to related parties. In fact, 90 per cent of Union Bank and Global Islami Bank's loan portfolios went to S. Alam Group, and are now classified as bad debts. Similarly, 70 per cent of loans at First Security Islami Bank and 20 per cent at Social Islami Bank went to the same group. Meanwhile, 10 per cent of loans at EXIM Bank are tied to businesses associated with its former chairman. Banking regulations prohibit lending more than 25 per cent of a bank's capital to a single borrower. This is a safeguard to protect against excessive risk. So, what were the regulators doing when these individuals made a mockery of that limit? How many red flags were ignored for these violations to occur? Reports suggest that S Alam used these funds to build overseas business ventures worth billions. Given the scale of this self-serving lending, the collapse of these banks was only a matter of time.

The current struggles of these banks are undeniably the result of failures by both banks themselves and their regulators. In the end, people reap what they sow. There is no getting around it. The same principle applies to the consequences facing the banking sector. The pressing question now is what the central bank's decision to merge five banks will actually achieve. After the merger and the injection of public funds to restore the newly formed entity, can anyone guarantee it won't once again become a target of political plunder? Have the necessary lessons been learned to prevent a repeat of past mistakes? Without fundamental reforms in the banking sector and strict enforcement of accountability, mergers alone will amount to nothing more than a temporary fix.

There are also serious concerns regarding Bangladesh Bank's policy guidelines on bank mergers. According to the policy, directors of a weak bank or financial institution may return to the board of the merged entity after five years, provided they meet certain conditions. These are often the same people who drove their banks into crisis, and this provision effectively grants a form of immunity by allowing their return after a brief absence. It is imperative that individuals who contributed to the plundering of banks face the consequences of their actions, rather than being given a chance to repeat them.

To bring about a real change, the old playbook must be discarded. Change in the banking sector demands reforms that put structural safeguards in place, mechanisms that would actively prevent violations of single borrower exposure limits or avenues for misinvoicing. Loopholes, after all, are invitations for abuse. Only when such protections are firmly established can bank mergers be expected to produce lasting, positive outcomes. Otherwise it is simply setting the stage for another collapse.​

 

[Saif]

IMF cannot avoid responsibility for corruption in Bangladesh: Dr Anisuzzaman

Dr Anisuzzaman Chowdhury, special assistant to the Ministry of Finance (with the rank of State Minister), said that international lenders like the International Monetary Fund (IMF) cannot deny their role in enabling corruption in Bangladesh. “They gave loans despite witnessing corruption&mda

thefinancialexpress.com.bd

IMF cannot avoid responsibility for corruption in Bangladesh: Dr Anisuzzaman

FE ONLINE DESK
Published :
Jun 28, 2025 19:53
Updated :
Jun 28, 2025 19:53

Dr Anisuzzaman Chowdhury, special assistant to the Ministry of Finance (with the rank of State Minister), said that international lenders like the International Monetary Fund (IMF) cannot deny their role in enabling corruption in Bangladesh.

“They gave loans despite witnessing corruption—why didn’t they impose governance conditions then?” he questioned, as per local media reports.

Speaking at a seminar titled "Current Challenges in the Banking Sector: Borrowers’ Perspective", held at the DCCI auditorium, Dr Anisuzzaman said Bangladesh has come out of an economic ICU thanks to divine blessings and a people's uprising that changed the government.

Otherwise, the economy would have collapsed, Dr Chowdhury remarked.

He also criticised the central bank for relying solely on interest rate hikes to control inflation, calling it a "paracetamol solution."

Citing China, Mr Anisuzzaman argued that inflation can be controlled through alternative policies without raising interest rates.​

 

[Saif]

Reforming Bangladesh Bank

Bangladesh Bank, the central bank of Bangladesh, was established in 1971 following the country's independence. Initially staffed by former employees of the State Bank of Pakistan (SBP), it has since evolved into one of the most successful public institutions in the nation. Over the past five decade

thefinancialexpress.com.bd

Reforming Bangladesh Bank
Independence, governance, and strategic challenges
Forrest Cookson and M Kabir Hassan

Published :
Jun 30, 2025 22:15
Updated :
Jun 30, 2025 22:15

A front view of the headquarters of Bangladesh Bank in Dhaka —FE File Photo

Bangladesh Bank, the central bank of Bangladesh, was established in 1971 following the country's independence. Initially staffed by former employees of the State Bank of Pakistan (SBP), it has since evolved into one of the most successful public institutions in the nation. Over the past five decades, the Bank has played a crucial role in maintaining inflation stability and implementing key financial sector reforms. Notably, the Financial Sector Reform Program of the 1990s marked a turning point, enhancing the regulatory framework, establishing credit and bankruptcy systems, promoting private banking, and liberalising foreign exchange controls.

By 1993, the Bangladesh Bank had achieved significant independence from the Ministry of Finance. However, in the last decade, this autonomy has been progressively undermined by increasing ministerial interference in areas such as interest rate determination, exchange rate policy, and bank governance.

Global literature strongly advocates for central bank independence, warning that political control can lead to destabilising policies, such as unsustainable deficit financing or favouritism in bank regulation. Micro-level political interference, particularly the tolerance of non-performing loans (NPLs), remains a critical issue in Bangladesh, potentially suppressing gross domestic product (GDP) growth by 1.25-1.75 percentage points.

Central banks must be entrusted with achieving national macroeconomic targets, including low inflation and financial stability, while maintaining operational independence. Bangladesh Bank, like the United States (US) Federal Reserve, is tasked with controlling inflation and supporting economic growth. However, despite its nominally floating exchange rate regime, Bangladesh Bank and the Ministry of Finance have regularly interfered. This has led to an overvalued exchange rate, leading to a distortionary multiple exchange rate system.

The governance structure of the central bank is also problematic. Its Board, dominated by current and former government officials, lacks the independence necessary for credible oversight. The Board should be responsible for determining monetary policy and supervising the condition of the banking system. A reformed Board should comprise professionals from diverse fields such as banking, law, accountancy, and academia, and exclude active or retired civil servants. Board members should be full time officers with appropriate compensation. Transparent eligibility and vetting criteria must be instituted to ensure merit-based appointments.

OPERATIONAL AUTONOMY AND BUDGETARY GOVERNANCE: The central bank should limit its intervention in private banks to enforcing prudential regulations and ensuring financial integrity, avoiding undue influence over human resources or compensation policies. Any behaviour by the central bank officials involving nepotism or solicitation of employment or financial contributions from private banks must be explicitly prohibited and penalised.

Bangladesh Bank must uphold ethical standards, resisting the misuse of its regulatory authority for personal gain. Regular training and seminars on ethical conduct should be instituted.

In terms of budgeting, the central bank should enjoy autonomy from the executive branch, with oversight provided by the appropriate Parliamentary committee. Key budgetary components include: (1) Staff compensation - determined independently from civil service scales; (2) Staffing levels - aligned with operational needs, including on-site supervision; (3) Technology investments - particularly in cybersecurity; (4) Training and capacity development - including international exposure and advanced degrees; (5) Capital and maintenance expenditures - for infrastructure and logistics.

The Governor should also play an advisory role to the Government, formally engaging with the Prime Minister and Minister of Finance on matters including fiscal deficits, balance of payments, state-owned banks, and systemic risks. Public testimony before Parliament should occur biannually, promoting transparency and accountability.

STRENGTHENING BANK SUPERVISION: Supervision of commercial banks is a critical function of Bangladesh Bank. Effective on-site inspections are essential for: (a) Validating the recognition and provisioning of NPLs; (b) Monitoring large loans and loan rescheduling; (c) Ensuring foreign exchange compliance and preventing money laundering; (d) Verifying IT system security; (e) Evaluating the overall risk profile of banks.

A rigorous, CAMEL-based assessment (Capital, Assets, Management, Earnings, Liquidity) must be implemented. Special attention is required for large loans and listed companies, and inspectors must be adequately trained, including through mandatory stints at commercial banks.

Anti-corruption measures must be strengthened to maintain public confidence.

MANAGING PROBLEM BANKS: The Bangladesh Bank has historically struggled to effectively manage problem banks, defined as institutions with high non-performing loan (NPL) ratios and eroding capital bases. Such banks often spiral into insolvency due to poor governance or deliberate malpractice.

Once a private has been earmarked as a problem bank, a decisive approach is required: (1) Replace the Board and senior management; (2) Conduct independent audits and assess the potential for loan recovery; (3) Implement cost-cutting and branch rationalisation; (4) Bangladesh Bank may inject capital contingent on a viable recovery plan and with a sovereign risk guarantee; (5) As appropriate, deposits greater than the maximum of Deposit Insurance would be converted into shares or zero-coupon bonds; (6) Sell the rehabilitated bank to qualified investors.

The recovery period to reach capital adequacy should be no longer than three years. If recovery is unfeasible, a merger may be an option. If all of this proves unsuccessful, the Bank should be closed, depositors paid up to the limit of the Deposit Insurance, and loans transferred to an Asset Management Company.

A dedicated department should oversee problem banks and manage deposit insurance premiums.

Deposit insurance coverage should be increased significantly. [The current level of Deposit Insurance covers all deposits of Tk 2 lakh or less. For private and Islamic Banks, this covers 92 per cent of the number of deposits and 6 per cent of the value.] Additionally, an independent Asset Recovery Organisation (ARO) and dedicated Tribunal should be established to expedite loan recovery.

The proposed framework ensures timely identification and restructuring of problem banks, safeguarding depositor interests while minimizing fiscal costs. The Bangladesh Bank must adopt a proactive and transparent approach to ensure the resilience of the financial sector.

STATE-OWNED BANKS: These banks are insolvent, failing to meet capital adequacy requirements, and are operating without Central Bank Forbearance on required provisions. Historically, these have been centres of corruption and channels for inappropriate Government projects. The following actions are needed: (a) Abolish the position of Secretary, Financial Institutions Division, and turn over the regulation of the State-Owned Banks to the Bangladesh Bank; (b) Stop all lending to the private sector by State-Owned Banks; (c) All loans to State Owned Enterprises should have sovereign guarantees; (d) If capital adequacy cannot be achieved in five years, then banks are merged, privatised, or closed.

CONCLUSION: Bangladesh Bank stands at a crossroads. Its legacy of competence and service must now be matched with renewed independence, enhanced governance, and institutional reform. A professional, autonomous central bank, guided by ethical leadership and empowered by robust legal and budgetary frameworks, is crucial for Bangladesh's sustained economic progress.

Dr Forrest Cookson, economist, Development in Democracy. Dr M Kabir Hasan, Professor of Finance, University of New Orleans.​

 

[Saif]

Few banks thrived, others bled in 2024

For three banks, 2024 brought cause for celebration as they crossed the milestone of Tk 1,000 crore in annual profits for the first time. But for nine others, it was a year of reckoning, marked by mounting losses and a desperate fight for survival.

www.thedailystar.net

Part 2 Inside banking
Few banks thrived, others bled in 2024
Three broke into Tk 1,000cr profit club while nine saw record Tk 9,500cr losses

For three banks, 2024 brought cause for celebration as they crossed the milestone of Tk 1,000 crore in annual profits for the first time. But for nine others, it was a year of reckoning, marked by mounting losses and a desperate fight for survival.

This stark divide followed sweeping reforms in the banking sector that were introduced following the July uprising last year. As political influence lost its grip on the industry, governance improved, and long-buried toxic assets began to surface.

The fault lines separating strong lenders from struggling institutions became clearer, bringing the governance issue to the forefront.

Leveraging good governance and capitalising on solid customer trust last year, three banks joined the Tk 1,000 crore profit club, while nine of their market peers posted a combined loss of Tk 9,500 crore, according to an analysis by The Daily Star.

The findings are based on the latest available financial statements of 50 banks. Islami Bank Bangladesh, the country's largest shariah-based lender, was not included in the review as it has yet to publish its report.

Islami Bank made headlines during the previous regime several times over allegations of loan irregularities and corruption. Had its data been available, the divide in fortunes would likely have appeared even more dramatic.

Standard Chartered Bank led the profit-makers, posting a record-breaking Tk 3,300 crore in profits last year, the highest annual profit ever recorded by a bank in Bangladesh. This marked a 41 percent jump from its 2023 figure of Tk 2,335 crore, shows the analysis.

BRAC Bank, HSBC Bangladesh, and City Bank also crossed the Tk 1,000 crore profit threshold for the first time. BRAC Bank's earnings surged by 73 percent year-on-year, while City Bank saw a 60 percent increase.

"The real game-changer here is governance," said Asif Khan, president of CFA Society Bangladesh, a platform for investment professionals.

He said that many banks were overwhelmed by bad loans, which dented public confidence. Depositors grew more cautious and began shifting their funds to well-managed banks, even if it meant accepting lower interest rates.

"As a result, stronger banks attracted deposits at relatively low costs while earning solid returns from treasury bonds. That translated into healthy profits," Khan said.

Meanwhile, troubled banks began to falter. With closer scrutiny and stricter regulations in place, they were forced to acknowledge long-concealed non-performing loans and set aside hefty provisions. The financial hit was swift and severe, according to the investment analyst.

According to the analysis, bad loans of the 50 banks increased by 158 percent year-on-year, reaching Tk 348,892 crore in 2024. The worst-affected banks were those plagued by questionable lending activities during the previous regime.

Janata Bank reported the highest loss at Tk 3,066 crore, followed by AB Bank at Tk 1,968 crore and National Bank at Tk 1,707 crore. Collectively, these three banks accounted for Tk 108,738 crore — nearly a third of the total bad loans across the banking sector.

Others in the red included First Security Islami Bank, Social Islami Bank, BASIC Bank, Agrani Bank, Bangladesh Commercial Bank, and IFIC Bank. Deposits at these nine banks shrank by 3.3 percent, or roughly Tk 15,000 crore, while deposits across the sector rose by 12 percent, or Tk 136,665 crore.

"These banks were not just inefficient, they were victims of systemic theft and loan scams under the previous regime," said Khan.

He commented that many banks had earlier painted an artificially healthy picture of their books, concealing the true extent of bad loans. "Now they are acknowledging reality. As they begin provisioning properly, profits are taking a hit, but this transparency is ultimately a step in the right direction."

Md Mazibur Rahman, managing director of Janata Bank, admitted that his bank's losses came from a reclassification of assets following the political changeover.

"Many of our assets, previously shown as regular, were classified. That wiped out expected income from those and dragged down our bottom line," he said.

Janata Bank's bad loans soared by 171 percent in 2024, reaching Tk 62,805 crore.

Rahman, however, said things have begun to improve. "Our cash recovery in the last six months has already surpassed the total recovery made in 2024. We are selling off defaulters' assets, and field-level collections are also up. It will take time, but we are on the road to recovery."

ZM Babar Khan, managing director and CEO (CC) of AB Bank, said over the past few years, they have faced significant challenges due mainly to non-performing loans.

As of December 2023, the bank's classified loan ratio stood at 30 percent, including deferred loans, which the bank hoped to recover within 2024.

"But due to political instability last year, many of our large corporate borrowers were unable to meet their commitments. As a result, we fully recognised the non-performing loans in our financial statements, which led to a substantial suspension of interest income," said Khan.

Khan said they are now pursuing a comprehensive recovery plan, and the bank has mobilised deposits totalling Tk 6,400 crore over the past six months.​

 

[Saif]

A roadmap to restore banking sector stability

Some banks are simply non-viable and suffer from inherent governance problems.

www.thedailystar.net

A roadmap to restore banking sector stability

I have been writing about the danger of non-performing loans (NPLs) and the related threat to the stability of the banking sector since 2012. Some 13 years later, the problem has escalated astronomically with little signs of reversal. The problem was somewhat muted between FY2012 and FY2020, but has gotten out of hand since then. The total value of NPL surged from a low of Tk 22,700 crore in FY2012 to a peak of Tk 4,20,300 crore in FY2025. In terms of share of the total loan portfolio, gross NPLs surged from six percent in FY2011 to 24 percent in FY2025.

The underlying factors for this rapid deterioration in the quality of the banking portfolio are well-known. Poor banking sector governance such as corruption in bank management, poor lending and loan recovery practices, especially in public banks, large scale thefts often aided by political intervention, ineffective banking sector supervision, and dual banking oversight arrangement under which the public banks are managed by the government while private banks are supervised by the Bangladesh Bank (BB), are such factors.

With the induction of the interim government, it was expected that there would be a sea change in the management, regulation and supervision of the banking sector that would usher in visible positive outcomes.

Indeed, starting in mid-August of 2024, some swift actions were taken by the BB to restore the financial health of the 14 weakest-performing private banks. These included board and management changes, injection of new liquidity, and tighter supervision. To improve transparency, asset classification norms were modified to comply with Basel III norms. Banks were instructed to pursue vigorously the recovery of NPLs. A Bank Resolution Ordinance-2025, which allows BB to take swift actions against any financial institution to protect the stability of the sector, was adopted in May 2025. Several task forces were established to comprehensively address the ills. These include a task force to strengthen the independence of the Bangladesh Bank, another to develop specific resolution strategies for handling the problematic banks, and another to pursue asset recovery options at both home and abroad.

Many of the banking problems and solutions are long-term in nature. Yet, some visible signs of progress have emerged. Most prominently, the bleeding of the banks through outright theft has stopped. The liquidity situation of several problematic banks has improved, enabling them to service the deposits of their customers, thereby preventing a threat to the rundown on deposits. Lending decisions are now more professionally managed. The supervision oversight of BB has been strengthened. The progress with asset recovery, however, has been very limited.

What then explains the near doubling of NPLs between FY2024 and FY2025? BB argues that this reflects the application of internationally accepted asset classification norms. Previously, the true value of NPL was hidden through manipulation of the accounting norms, and now we have a correct picture of the problem at hand.

While there is no doubt that the true picture of NPL was hidden previously through accounting gimmicks, it is nevertheless important to do a holistic diagnosis of the NPL problem and changes over the past 10 months. The economy has been going downhill, with GDP growth sliding to four percent or less in FY2025. Businesses have been complaining regularly about cost escalation and weak profitability, especially in the manufacturing sector. It is hard to imagine that these factors had no impact on the banking portfolio, and the near doubling of NPL is all explained by a change in accounting norms.

A comprehensive resolution of the NPL problem will require two types of interventions: policies that address the flow of new NPLs, and policies that address the outstanding stock based on the adoption of Basel III loan classification norms for all banks, including public banks.

Regarding new NPL flows, first and foremost, the actions already taken by BB to stop the bleeding in the problem private banks must be extended to public banks as well. The system of dual banking supervision, where public banks are supervised by the Banking Division of the Ministry of Finance, must be stopped. All banks, public or private, must be regulated and supervised by the BB with full application of Basel-III norms.

Secondly, to the extent that the surge in NPL reflects the underlying economic downturn, swift policy actions are needed to reverse these trends. With the implementation of comprehensive reforms in fiscal policy, trade policy, investment climate, including establishing the rule of law, improvements in trade logistics and energy supply, acceleration of ITC adoption, and investment in critical skills are recommended. The government must understand that not all banking problems are necessarily due to theft and corruption. A significant part may be related to the downturn in the economy and has to be addressed accordingly.

Regarding the stock of NPL, the steps taken by BB are in the right direction, but they have to be substantially strengthened, and implementation must be stepped up. The necessary comprehensive approaches are: restoring the financial solvency of the distressed banks; ensuring the profitability of the rescued banks; closing the inherently unprofitable banks down; and strengthening built-in mechanisms for preventing future banking crises.

Restoring the financial solvency of distressed banks is relatively easy when the number of problem banks is limited, recovery prospects for outstanding loans are good, and there is adequate fiscal space. On all three counts, Bangladesh seems to be in a very difficult situation. BB will need to do a full workout of the amount of new financing required to restore the banks that are rescuable and can be put back in the market on a profitable basis. Once this amount is known, a financing strategy needs to be developed. This, arguably, will pose the biggest challenge to the banking reforms.

The financing can be a combination of additional financing from the treasury, additional funding from BB, new financing from current owners, and money raised from the capital market by new shareholders. Given the dire fiscal situation and the inflationary risk from BB financing, much of it will have to come from current and future owners. The government may also seek financial support from multilateral development financing institutions like the World Bank. Where public financing is involved, new capital must be injected only into potentially viable banks that can be restored with adequate operational reforms to earn profits from future operations. Furthermore, steps have to be taken to ensure that the treasury/BB has first claim on profits of the restructured banks to fully recover injected funds.

International experience shows that ensuring the profitability of rescued banks is easier said than done. This requires comprehensive banking reforms including sharp improvements in bank management, quality staffing and IT systems, strengthening financial accounting and auditing standards to international norms, strong internal mechanisms for loan supervision and recovery, strong internal controls and risk assessment, and sound outcome-based BB supervision.

Some banks are simply non-viable and suffer from inherent governance problems. These typically belong to the public sector. Even though the lending share of public banks has fallen to 25 percent of total loans, these banks present a huge fiscal risk.

Policy options include: privatisation of all except the Sonali Bank that will only pursue treasury functions; full corporatisation and stock market divestment with management control to private shareholders; and converting the four large public banks into narrow banks that allow deposit holding and investment in treasury bills but excludes lending, while closing down the two small banks—Basic Bank and the Bangladesh Development Bank.

Some private problem banks are also candidates for closure unless owners are willing to invest new capital to restore financial solvency and readiness to face the market with full compliance with Basel-III prudential norms.

Finally, there is an urgent need to strengthen the banking crisis prevention mechanisms. The most important policy reform is the need to sharply enhance the deposit insurance scheme. The US Federal Deposit Insurance Corporation is a good example of how a strong deposit insurance scheme can prevent a large-scale banking crisis. A second built-in mechanism is to increase the share of equity by increasing the tier-1 capital requirements beyond Basel-III minimum standards to provide an incentive to bank owners against undue risks. A third reform is the strict implementation of Basel-III supervision norms for all banks with no exceptions. A fourth crisis prevention action would be to establish a system of bank-risk ratings based on independent credit agencies. This information should be publicly available.

Sadiq Ahmed is the vice-chairman of the Policy Research Institute of Bangladesh.​

 

[Saif]

Bangladesh Bank eases loan rules to attract foreign investors

Bangladesh Bank has revised its foreign exchange policy to ease local borrowing for foreign-owned or foreign-controlled companies operating in the country. In a circular issued by the Foreign Exchange Policy Department on Wednesday, the central bank announced an increase in the allowable debt-equi

thefinancialexpress.com.bd

Bangladesh Bank eases loan rules to attract foreign investors

UNB
Published :
Jul 02, 2025 23:03
Updated :
Jul 02, 2025 23:04

Bangladesh Bank has revised its foreign exchange policy to ease local borrowing for foreign-owned or foreign-controlled companies operating in the country.

In a circular issued by the Foreign Exchange Policy Department on Wednesday, the central bank announced an increase in the allowable debt-equity ratio for such companies from 50:50 to 60:40.

The move is aimed at facilitating access to Taka term loans for capacity expansion or BMRE (Balancing, Modernisation, Rehabilitation and Expansion) purposes.

The updated provision applies to foreign-owned or controlled companies engaged in manufacturing or service output activities in Bangladesh for at least three years.

Bangladesh received $2.7 billion remittances in 29 days of June

These entities are now eligible to secure term loans from the domestic market irrespective of the local content in their equity, as long as they comply with applicable credit norms and prudential regulations, including the single borrower exposure limit.

“All other instructions in this regard shall remain unchanged,” said the circular, signed by Monoar Uddin Ahmed, Director of the Foreign Exchange Policy Department.

The updated policy is part of broader efforts to attract and retain foreign investment by offering more flexible financing options.​

 

[Saif]

On the core reform of Islamic banking

Although Islamic Shariah-based banking began in the country in 1983, a fully Shariah-compliant Islamic bank has yet to be established. Currently, there are 10 full-fledged Shariah-compliant banks. Additionally, 11 conventional banks offer Islamic banking services through their Islamic windows. In o

thefinancialexpress.com.bd

On the core reform of Islamic banking

S M Abu Zaker
Published :
Jul 04, 2025 22:30
Updated :
Jul 04, 2025 22:30

Although Islamic Shariah-based banking began in the country in 1983, a fully Shariah-compliant Islamic bank has yet to be established. Currently, there are 10 full-fledged Shariah-compliant banks. Additionally, 11 conventional banks offer Islamic banking services through their Islamic windows. In other words, out of the 61 banks in the country, 34.42 per cent are involved in providing Islamic Shariah-based banking services.

According to the 2022 census, the country’s total population was 165 million, of which 91.04 per cent—or approximately 150 million—are Muslims. A large portion of the Muslim population tries to avoid interest-based transactions in obedience to the commands of Allah and His Messenger. They consider interest (riba) to be as strictly forbidden (haram) as alcohol and pork, and therefore avoid conventional banking. As a result, the growth of Islamic banks in the country has become quite noticeable. By the end of March 2025, Islamic banking systems accounted for 24.36 per cent of total deposits and 28.93 per cent of total investments (loans) in the banking sector.

Devout Muslims engage in banking with Islamic banks due to their religious values. It is the responsibility of the state to prevent entrepreneurs from exploiting these religious sentiments for unethical profit. There exists a significant opportunity for illegitimate gains in this sector under the guise of religion, with hundreds of crores of taka potentially manipulated unethically while appearing legitimate. As a result, it appears that the Islamic banking sector has been the most significantly disrupted following the July 2024 revolution in Bangladesh. Therefore, alongside reforms in the overall banking sector, the Islamisation of Shariah-based Islamic banks should be considered as the core reform of the Islamic banking sector.

It is widely known that Shariah-based Islamic banks do not engage in interest-based transactions. Shariah compliance, a key principle of Islamic banking, means that all financial activities and products must adhere to Islamic law. In these banks, profit is shared between depositors and the bank according to pre-agreed terms, rather than paying a fixed interest rate on deposits. At the end of the year, profits are calculated and distributed proportionally based on the weightage of each deposit product. The terms of the profit-sharing contract can vary, such as a 65:35 ratio, meaning depositors receive 65 per cent of the profit, and the bank retains 35 per cent. Each Islamic bank has a Shariah Board to oversee whether profit distribution is compliant with Islamic principles. However, if this board fails to ensure proper Shariah compliance, there remains the possibility of manipulative accounting, whereby depositors receive less profit while the directors enrich themselves. Interestingly, information on how much profit is distributed to depositors is rarely published in the media, yet the annual dividend rate given to shareholders is prominently displayed in newspapers. This is ironic, considering that banks operate primarily using depositors’ money. But rather than protecting the interests of depositors, Islamic banks often appear more focused on safeguarding the interests of dividend-receiving shareholders. This calls for a fundamental reform in the system—an urgent Islamisation of Islamic banks. For example, suppose an Islamic bank introduces a “double-your-money-in-five-years” scheme. If a customer tries to withdraw their matured deposit after five years and is told that the bank could not generate sufficient profit during the related tenure, the amount cannot be doubled. In case of protest and dissatisfaction of the customers, the bank tries to pacify them with the argument that profit rates in Islamic banking are not fixed, as per Shariah. But if that’s the case, why advertise it as a “double scheme” in the first place? Islamic banks must stop such misleading practices. Even if the account opening form includes terms that legally support the bank’s stance, how many customers read those conditions before signing?

Islamic banks require Islamisation in their loan and investment management systems. Although there are fundamental differences between the credit management systems of conventional banks and Islamic banks, in practice, many Islamic banks often disregard Shariah principles and operate under rules similar to those of interest-based institutions. When Shariah compliance is absent, investments become riskier and are more likely to default. Take, for example, Bai-Muajjal, a standard Islamic investment mode. In this model, the bank purchases a product on behalf of the client, pays the seller through a pay-order, takes ownership of the product (even for a moment), and then sells it to the client at a fixed profit margin, with the total amount to be repaid within a specified time—usually up to a year. Bai-Muajjal is a deferred payment sale, where the bank buys a product for the customer and then sells it back at a higher price, allowing the customer to pay in installments. However, in reality, many investments are approved under Bai-Muajjal without the actual physical presence of the goods. Such transactions, lacking real goods, are not Shariah-compliant. These kinds of transactions often involve high-profile clients and become major liabilities for the bank. Without adequate collateral as security, the bank cannot take legal action against the borrower, fearing loan classification issues. A large classified loan can lower the bank’s credit rating, reduce profits, negatively impact stock market performance, and erode depositor confidence. Once trapped in such a cycle, it becomes difficult for the bank to recover. Every year, they are compelled to renew these non-compliant investments through additional Shariah-violating measures, thereby perpetuating the crisis.

Another investment method is called Murabaha Trust Receipt (MTR). Under this arrangement, the client imports goods and, without immediately paying the import bill, receives the import documents from the bank to clear the goods from the port, subject to settling the payment within a maximum of three to six months. Often, the client may have already arranged a forward sale of the goods, and even after receiving payment from the buyer, they may not repay the bank on time. Instead, the funds are diverted, frequently to repay loans received from other banks. In this way, clients repay bank loans by borrowing money from different banks to keep all their loan accounts up to date, while their total debt burden continues to increase. Eventually, this can lead the client to bankruptcy. Since banks often do not take sufficient collateral for such investments, they lack the leverage to take strict action when the client defaults.

In contrast, Murabaha Post-Import Investment is a Shariah-compliant and more secure alternative for clients. In this model, if the client lacks the funds to clear the goods from the port, the bank creates an investment in the client’s name, clears the goods at its own expense, and stores them in the bank’s warehouse. Later, the client can gradually pay for the goods and take delivery (DO) in parts. Although this approach is more troublesome for bankers, it ensures full Shariah compliance and significantly reduces the risk of default, since the goods remain under the bank’s control until fully paid for. Yet, for unknown reasons, Islamic banks are less inclined to adopt this method. As a result, dishonest clients exploit the system and fail to make repayments. Despite Shariah’s apparent preference for such controlled and secure transactions, the banks continue to use less compliant, risk-prone alternatives. Therefore, to finance clients in a truly Shariah-compliant manner and protect both the bank’s and depositors’ interests, there is no alternative but to Islamise the operations of Islamic banks fully.

To read the full article, please click the link at the top.​

 

[Saif]

Customers' distrust, not liquidity, is banking industry's main problem

Distrust, not the liquidity crisis, among customers is the main problem badly impacting the banking industry, Chairman of Dhaka Bank PLC Abdul Hai Sarker says. In an exclusive interview with The Financial Express (FE) given ahead of the private commercial bank's 30th founding anniversary, which is

thefinancialexpress.com.bd

Customers' distrust, not liquidity, is banking industry's main problem
Says Dhaka Bank Chairman Abdul Hai Sarker

Jubair Hasan
Published :
Jul 05, 2025 08:23
Updated :
Jul 05, 2025 08:23

Distrust, not the liquidity crisis, among customers is the main problem badly impacting the banking industry, Chairman of Dhaka Bank PLC Abdul Hai Sarker says.

In an exclusive interview with The Financial Express (FE) given ahead of the private commercial bank's 30th founding anniversary, which is being observed today, he said the banking sector is passing the most critical time due to customers' lack of confidence in banking services.

But Dhaka Bank continues to give utmost priority to uphold the trust of its valued customers. Because of this, there has not been a single instance since its inception where a customer of the second generation bank has left without getting money, he said.

"Once we fail, we are finished. So, we are very cautious about it. That is why our customers keep faith in our banking services even in tough times like this," he said.

Mr Sarker, also the chairman of the Bangladesh Association of Banks (BAB), said the liquidity issue is not the major problem the industry faces now.

"It is the distrust among customers in banking services. All stakeholders should work together to bring trust back by any means. If customers lose confidence, it will not be possible to salvage any bank even through fund injections by the regulator and shareholders," the experienced banker said.

He also called upon media personnel to cover bank-related issues more responsibly to avert any form of disinformation that could create panic among depositors.

About the bank's ongoing and future planning, the chairman said the ultimate target of the commercial lender is to transform its services into completely paperless in phases.

Keeping this broader objective in mind, he said, the bank continues to adopt cutting-edge technology to provide financial services digitally to the fast-growing tech-savvy population.

"But we want to bring the transformation in a sustainable way so that both bankers and customers find it easily manageable. Financial matters should not be changed revolutionarily; it is an evolutionary process," he said.

When his attention was drawn to non-performing loans (NPLs), he said the volume of classified loans of the bank stood below 5.0 per cent.

But there are slim chances of recovering the funds as 80 per cent of the bad borrowers either left the country or are on the run after the changeover in state power, he said.

Now, the bank's shareholders are sacrificing their profits to maintain the provisioning requirement against default loans set by the central bank, according to him.

The chairman was too critical about issuing too many bank licences in a small economy like Bangladesh. "If you issue licences irresponsibly, a situation like this will arise."

"A bank is a financial institution, but licences have been issued on political considerations, and these are the carryovers of the wrong planning," he said.

Regarding the Bank Resolution Ordinance through which the central bank would take control of the problem-ridden banks before going for moves like merger-acquisition and recapitalisation, he said there are some government-owned commercial banks that are not in sound financial health.

"Let us bring them back on track first. The government should think thrice before taking control of more banks. It talks more about reforms, but it should start from home first," he said.

About the upcoming amendments to the Bank Company Act where the regulator is expected to reduce the power of shareholders, Mr Sarker said the focus should be on removing the loopholes in the existing laws and implementing the latter strictly.

"Loan defaulters usually get out of the legal charges by using the loopholes in the existing laws. If it stops, I think the recovery of bad loans will go up by 70 per cent," he added.​

 

[Saif]

Inside the 3-year plan to fix banks

Bangladesh has committed to a sweeping overhaul of its troubled financial sector, outlining a detailed three-year roadmap as part of its latest agreement with the International Monetary Fund.

www.thedailystar.net

Inside the 3-year plan to fix banks
Govt agrees to raft of new laws, deep-dive asset reviews and a crisis management framework

Bangladesh has committed to a sweeping overhaul of its troubled financial sector, outlining a detailed three-year roadmap as part of its latest agreement with the International Monetary Fund.

The reform plan, also backed by the World Bank and the Asian Development Bank, is built on a package of legislative, supervisory, and institutional changes designed to restore stability, aggressively pursue bad loans, and protect taxpayers from future bank failures.

Under the plan, Bangladesh will establish a government-wide strategy for the banking sector. This will clarify the roles of Bangladesh Bank and the finance ministry in managing crises and define the conditions for any potential state support for ailing lenders.

A new Banking Sector Crisis Management Council (BCMC) will be constituted to oversee the process and coordinate responses. The government said the goal is to ensure banks are financially sound and to end the long-standing practice of granting "regulatory forbearance" to weaker institutions.

At the heart of Bangladesh's financial sector reform is a legal overhaul to strengthen recovery mechanisms, modernise insolvency procedures and give regulators the tools needed to intervene decisively in troubled banks.

With non-performing loans and governance lapses weighing on the sector, the reform package represents the strongest policy signal in years. The IMF has linked future disbursements under its $5.5 billion programme to the implementation of these reforms.

LEGAL BLITZ

The government has committed to enacting or amending a series of laws by the first quarter of FY2026, laying the legal foundation for a more resilient financial system:

Bankruptcy Act: A new corporate insolvency framework will be introduced to allow for the early restructuring of viable but distressed companies, aiming to keep them out of lengthy liquidation proceedings and align Bangladesh with international standards.

Money Loan Court Act: The law governing loan recovery will be amended by the first quarter of fiscal 2026 to clear bottlenecks. In the interim, Dhaka has pledged to boost staffing and resources for the courts to tackle case backlogs and enforce verdicts more quickly. The system has long been plagued by understaffing and delays.

Distressed Asset Management Act: This law will create a framework for licensing private asset management companies. This is intended to launch a platform for trading non-performing loans (NPLs), allowing banks to offload bad debts. However, officials have ruled out a state-funded "bad bank", saying they will not use public funds to buy NPLs from private banks.

Bank Resolution Ordinance: Adopted in May 2025, this ordinance grants the central bank powerful tools to resolve failing banks, including special wind-up procedures. It provides a legal shield for regulators, limiting judicial challenges to compensation claims under the principle that no creditor should be worse off than in a liquidation. A resolution handbook has been drafted to make the law operational.

Deposit Protection Ordinance: This law will double the deposit insurance coverage limit to Tk 200,000. It will also allow the new Deposit Protection Fund to provide funding to support bank resolutions, a model known as "Pay Box Plus", backed by an emergency government funding line.

The government is tightening the rules on how banks are run and reversing previous changes that weakened oversight.

As part of the crackdown, Bangladesh Bank has already taken action against 15 poorly-managed private banks since the recent liquidity pressures began. It has replaced the board of directors at 14 banks and completely dissolved the board of another, appointing an administrator to run it. These banks are now under close supervision with new, independent boards.

To increase transparency, the central bank has issued a new rule requiring banks to identify and report who their true owners are. Looking ahead, the government will propose changes to the Bank Company Act by the end of 2025. These changes will ensure that both the real owners and board members of banks are properly qualified and suitable for their roles.

These improvements are not just for private banks. The finance ministry is also strengthening the qualification and selection process for board members at state-owned banks.

Parallel to the legal changes, Bangladesh Bank is directing commercial banks to beef up their own legal departments and adopt new NPL settlement roadmaps. These roadmaps will be updated in FY2026 to reflect revised NPL levels following asset quality reviews.

The government says this legal revamp is essential to maintaining credit discipline and reducing reliance on forbearance or political intervention in loan recovery.

"Strong legal and institutional frameworks for maximising recoveries on distressed loans are essential to maintaining resilient and efficient credit markets," the government said.

ASSET RECOVERY

The government has reconstituted an asset recovery task force led by the central bank, working with the Bangladesh Financial Intelligence Unit, Anti-Corruption Commission and international agencies. The goal is to "freeze, confiscate and recover stolen assets" from banking fraud and corruption, both domestically and globally.

Officials admit the vulnerabilities have "reached macro-relevant proportions, including embezzlement and fraud at banks", and see asset recovery as "a critical part of our broader efforts to promote accountability".

Bangladesh Bank is also establishing an emergency liquidity assistance framework by December 2025. It will include a Shariah-compliant window and protections to ensure any liquidity support is "collateralised and, as appropriate, covered by government indemnities". The authorities pledged to "immediately sterilise any liquidity assistance… to mitigate inflationary pressures."

ASSET QUALITY REVIEWS

The government is undertaking donor-backed asset quality reviews (AQRs) of 18 private banks, representing 35 percent of system assets. The first phase, covering six banks, was completed in May. The remaining 12 are scheduled for review by December 2025. According to the official communication, "the terms of reference have been agreed with the IMF, WB and ADB", and an oversight committee will be in place.

AQRs for state-owned banks are also on the table. The authorities are "considering advising state-owned banks to conduct AQRs by independent consultants by March 2026.

Bangladesh Bank has adopted a risk-based supervision model and completed pilot inspections for 20 banks, covering nearly half of the system assets. It has also instructed banks to revise asset classifications based on a tighter definition of "overdue loans".

A new structure will consolidate the central bank's supervision into single teams per bank by January 2026. Meanwhile, the government has committed to implementing IFRS 9, the global standard for loan loss provisioning, by 2027, with interim prudential buffers in place.​

 

[Saif]

Risk-based supervision of banks from Jan'26

Governor of the Bangladesh Bank Dr Ahsan H Mansur on Monday said the risk-based supervision (RBS) system's official implementation would start in the country's banking sector in January 2026, aiming to usher in qualitative changes in how banks are monitored and regulated. Speaking at a press brief

thefinancialexpress.com.bd

Risk-based supervision of banks from Jan'26
Says BB Governor Ahsan H Mansur, terms it forward-looking

FE REPORT
Published :
Jul 08, 2025 00:09
Updated :
Jul 08, 2025 00:09

Governor of the Bangladesh Bank Dr Ahsan H Mansur on Monday said the risk-based supervision (RBS) system's official implementation would start in the country's banking sector in January 2026, aiming to usher in qualitative changes in how banks are monitored and regulated.

Speaking at a press briefing held at the central bank headquarters in the capital, he said the RBS system - already practiced in many economies, including neighbouring India - would replace the traditional compliance-or directive-based model.

"Risk-based supervision is forward-looking and anticipatory, rather than reactive," the governor said in his introductory speech.

The central bank has been working on RBS implementation for the past two years, he said.

A pilot project involving 20 commercial banks has already been carried out, and the remaining 41 would be brought under it by December 31, 2025, he said.

"We expect to fully implement RBS from January 1, 2026, which will ensure qualitative transformation in the banking industry," Dr Mansur said.

He noted that 12 dedicated working groups, comprising officials of different strata at the central bank, have been formed to oversee and coordinate the implementation.

A standard response format is being developed and would be shared with all banks. Responses submitted by banks would be handled through an automated system, said the governor.

"For the banks that are still not ready to respond to this new framework, they will prepare themselves within the next six months," he said, adding, "We aim to ensure 360-degree supervision in the banking sector."

He also revealed that the Bangladesh Bank plans to adopt International Financial Reporting Standard 9 (IFRS-9) across the banking sector by January 2028, replacing the older IFRS-39.

However, he acknowledged that the 2028 time frame is "ambitious," noting that many countries have taken four years or more to fully implement IFRS-9 due to its complexity and scope.

Responding to questions from journalists on political interference in bank loans and financial scams, Dr Mansur emphasised the need for a mindset shift at the political level.

"There must be changes in the political culture to address the root causes of banking irregularities," he said.

He stressed the importance of enhanced autonomy for the Bangladesh Bank, saying, "We will approach the government to strengthen the central bank's independence to shield it from political pressures."

"The political parties have lessons to learn from the current state of the banking sector," he added. "If these lessons are not learnt by political leaders, there is even a risk that they will face the same fate as those who are now in exile."

Addressing concerns over the appointment of independent directors to banks, the governor revealed that the central bank favours a model where more than 50 per cent of bank directors are independent.

"A pool of qualified independent directors will be created, and banks will be asked to choose from this list," he said. "This is to move away from the existing culture where banks appoint relatives or acquaintances as so-called independent directors."

Regarding the asset quality review of six struggling banks, Dr Mansur said the findings are disappointing.

"Their current assets are very weak. If they can convince us with solid plans to turn around, we may review our stances," he said.

He noted that chief executive officers of banks had met him before the press meeting and welcomed the decision to implement RBS.

In a separate disclosure, he said the central bank is planning to diversify its foreign currency reserve investments from a heavy reliance on US dollar-based assets.

This move is aimed at minimising potential risks amid fears of dollar depreciation under possible future Trump administration policies, he said.

"We need to protect our reserves from currency shocks. Diversification is a strategic necessity, and we will discuss it with international parties," he added.​

 

[Saif]

Bangladesh Bank unveils major regulatory policy for banks

Bangladesh Bank is undertaking a significant restructuring of its regulatory framework for bank supervision, moving to implement a comprehensive Risk Based Supervision (RBS) policy across all scheduled banks starting January 1 next year. This initiative seeks to bolster efficiency, strengthen over

thefinancialexpress.com.bd

Bangladesh Bank unveils major regulatory policy for banks

Published :
Jul 07, 2025 18:14
Updated :
Jul 07, 2025 18:14

Bangladesh Bank is undertaking a significant restructuring of its regulatory framework for bank supervision, moving to implement a comprehensive Risk Based Supervision (RBS) policy across all scheduled banks starting January 1 next year.

This initiative seeks to bolster efficiency, strengthen oversight, and align with international best practices, though Governor Ahsan H. Mansur highlighted political interference as a substantial risk to financial good governance. The government will take action in reforming the political sector, UNB reports.

Speaking at a press conference on Monday, Mansur underscored political risk as a major impediment, stating, "Political risk is a big risk to maintain good governance in the financial sector, which happened earlier."

He emphasised the need for politicians to be "corrected and aware of the result of political interference" to mitigate this challenge.

The central bank's revamped approach will involve a comprehensive RBS framework, encompassing policy documentation, risk matrix development, and a model supervisory report to manage inherent risks like credit, market, operational, legal & regulatory, and strategic exposures.

A total of 61 banks will be brought under supervision in the new system under 12 groups in the central bank. As a result, real time information of financial risk is possible to monitor from a single umbrella in the central bank.

Already, 20 have been brought under this system, the other banks will come under this system by December 31, 2025.

The governor said that if any trouble is seen in running independently, then the central will consider it, otherwise they will be brought under state control.

Replying to a query, Mansur hinted at restructuring the board of some shariah-based banks after reviewing their performance.

Key initiatives underpinning this transformation include:

Organizational Transformation: Restructuring into bank-specific teams and specialized departments such as Supervisory Policy and Coordination, Supervisory Data Management and Analytics, Technology Risk and Digital Banking Supervision, and ML/TF Risk Supervision.

Capacity Building: Conducting targeted training programs for central bank and commercial bank officials, with active collaboration from international partners including the IMF, World Bank, and IFC.

IT Systems Development: Developing a new Rationalized Input Template (RIT) and a centralized supervisory dashboard for data-driven supervision and enhanced analytical capabilities.

Phased Rollout: Following successful pilot programmes, a full rollout to all 61 scheduled banks is slated to begin by July 2025, leading to the full implementation by January 2026.

Enhanced Supervisory Cycle: Introducing a standardized supervisory process covering risk assessment, planning, engagement, intervention, and follow-up.

This extensive overhaul marks a strategic step towards fostering a more robust culture of compliance, risk awareness, and technological innovation within Bangladesh's banking sector, aspiring to enhance the stability and integrity of the financial system and support sustainable economic growth.​

 

[Saif]

Time for govt to act now

THE banking sector has for decades been grappling with persistent challenges that have left it teetering on the edge of credibility. Despite being a vital pillar of the economic growth, the sector remains marred by corruption, poor governance, political interference, and a weak regulatory...

www.newagebd.net

BANKING REFORMS
Time for govt to act now
Shahidul Alam Swapan 08 July, 2025, 00:00

Bangladesh Bank. | New Age

THE banking sector has for decades been grappling with persistent challenges that have left it teetering on the edge of credibility. Despite being a vital pillar of the economic growth, the sector remains marred by corruption, poor governance, political interference, and a weak regulatory framework. As a result, public trust has eroded significantly and urgent reform is necessary to prevent a deepening crisis.

Since the independence in 1971, the banking sector has expanded significantly. From a few state-owned banks, the sector has grown to include over 60 banks — comprising state-owned commercial banks, specialised banks, private commercial banks, and foreign banks. This expansion has supported the country’s remarkable economic progress, including improvements in infrastructure, remittance flows, and SME financing.

However, this growth has come with serious structural flaws. These flaws have been left largely unaddressed, and over time, they have weakened the sector’s resilience, transparency, and accountability.

Non-performing loans

AT THE heart of the credibility issue lies the persistent problem of non-performing loans. Bangladesh has one of the highest non-performing loan ratios in South Asia. Official figures put non-performing loans at around 9–10 per cent of total loans, but many analysts and insiders believe the real number may be significantly higher due to rescheduling, restructuring, and window-dressing practices.Bangladesh-themed souvenirs

Large corporate defaulters, often with political connections, account for a disproportionate share of non-performing loans. Repeated loan rescheduling, sometimes without proper risk assessment or recovery effort, has created a culture of impunity. In effect, wilful defaulters continue to access fresh credit while honest borrowers struggle, creating an uneven and unjust financial environment.

This trend endangers financial stability and reduces banks’ lending capacity to productive sectors, such as SMEs, startups, and agriculture. The ripple effect on employment, innovation, and long-term economic growth is considerable.

Political interference, weak governance

ONE of the most critical issues undermining the banking sector’s credibility is political interference. Appointments to bank boards, particularly in state-owned banks, are often based on political affiliations rather than merit or experience. This practice compromises corporate governance and opens the door to misuse of banking facilities.

Private banks, too, are not immune. Several banks have been established by politically connected businesspeople that sometimes treat these institutions as personal vaults rather than public trusts. There have been instances of insider lending, poor risk management, and inadequate oversight from regulators.

The central bank, Bangladesh Bank, has often been criticised for its soft-touch regulation. While the institution has a critical role in maintaining financial discipline, it has frequently failed to enforce rules robustly or penalise errant institutions. Some analysts argue that the central bank has been kept deliberately weak or politically constrained, limiting its ability to act independently.Bangladesh-themed souvenirs

Cyber heists, regulatory failures

PERHAPS, the most high-profile blow to the sector’s credibility was the 2016 Bangladesh Bank cyber heist, in which hackers stole $81 million from the central bank’s account at the Federal Reserve Bank of New York. The incident exposed serious lapses in cybersecurity and internal controls at the very heart of the banking system.

Although some recovery efforts were made, the incident damaged the international reputation of Bangladesh’s financial institutions. It raised alarms about how even the central bank could fall victim to lax oversight and negligence.

Over the last two decades, the number of private commercial banks has surged, often driven by political lobbying rather than market need. Critics argue that Bangladesh has too many banks for the size of its economy. Many of these newer banks struggle to remain competitive, leading to risky lending practices, low profitability, and increased vulnerability to shocks.

Rather than encouraging consolidation or focusing on strengthening existing institutions, successive governments have often granted new licences — sometimes ignoring recommendations from the central bank. The result is a sector that is overbanked but underregulated.

Public trust

FOR ordinary citizens, the repeated scandals, poor governance, and lack of accountability have sown deep distrust in the banking system. The idea that influential defaulters can avoid consequences, while ordinary depositors face hidden charges, poor service, and limited protection, has created a sense of injustice.

While Bangladesh Bank provides a deposit insurance scheme, many consumers remain unaware of it, and concerns persist about its adequacy in case of large-scale bank failures. Confidence, once lost, is difficult to restore — and in banking, public confidence is everything.

The credibility crisis in the banking sector is not inevitable. It is the result of years of policy neglect and mismanagement. But it is not irreversible either.

Here are a few key reforms that could help restore confidence and stability:

Strengthen regulatory oversight: Bangladesh Bank must be given greater independence and resources to regulate the sector effectively. Its monitoring mechanisms, audit functions, and enforcement capabilities need to be significantly enhanced.

Crackdown on wilful defaulters: Transparent publication of loan defaulters’ lists, faster judicial processes for recovery, and harsher penalties for default can deter abuse of the system.Bangladesh-themed souvenirs

Improved governance in state-owned banks: The appointments of the board should be merit-based and transparent. Politicisation of bank management must end to restore professionalism.

Mergers and consolidation: Instead of issuing more licences, the government and regulators should promote strategic mergers to create stronger, more efficient institutions.

Modern risk management systems: Banks need to invest in stronger risk assessment tools, cybersecurity infrastructure, and professional training to keep up with global standards.

Transparency and disclosure: More regular, honest disclosure of financial performance, loan classification, and recovery rates is essential to build public and investor confidence.

The banking sector in Bangladesh is at a critical juncture. Left unchecked, the erosion of credibility could culminate in a broader financial crisis that affects not just banks but the wider economy. Rebuilding trust will require political will, regulatory courage, and a commitment to long-term reform over short-term gains.

A credible, efficient, and transparent banking sector is not just a financial necessity — it is a moral imperative for a country aspiring to reach middle-income status and beyond. Bangladesh cannot afford to let its banking institutions remain fragile, politicised, and mistrusted. The time to act is now.

Bangladesh-themed souvenirs


Shahidul Alam Swapan is a Geneva-based private banking financial crime compliance expert, columnist and poet.​

 

[Saif]

Foreign banks enhancing credit backup to BD counterparts

Banks now enjoy a feel-good ambiance in external trade financing as foreign counterparts open line-of-credit backup mainly as Bangladesh sees significant improvements in foreign-exchange receipt, officials and bankers say. After the changeover in state power following last year's July-August mass

thefinancialexpress.com.bd

FOREX-CRUNCH-TIME CREDIBILITY GAP CLOSES
Foreign banks enhancing credit backup to BD counterparts

JUBAIR HASAN
Published :
Jul 10, 2025 00:52
Updated :
Jul 10, 2025 00:52

Banks now enjoy a feel-good ambiance in external trade financing as foreign counterparts open line-of-credit backup mainly as Bangladesh sees significant improvements in foreign-exchange receipt, officials and bankers say.

After the changeover in state power following last year's July-August mass uprising, large international banks that typically act as correspondents for commercial banks here squeezed or suspended limit of their lines of funds for the Bangladeshi banks.

And it put the country's commercial lenders in serious trouble in dealing with international trade, according to them.

As the country's macroeconomic health started improving from early this year following payment of overdue import bills amounting to around $2.50 billion, foreign correspondent lenders began easing their line-of-credit support for their responding banks in February last. Now, majority of such overseas banks open their forex-backing supports for local banks here in a turnaround, according to the market players.

Correspondent banking is the provision of banking services by one bank (correspondent bank) to another bank (respondent bank). Bangladeshi banks mostly act as respondents.

By establishing multiple correspondent relationships globally, banks can undertake international financial transactions for themselves and for their clients in jurisdictions where they have no physical presence.

Seeking anonymity, the treasury head of a private commercial bank says, "Majority of the corresponding banks have already opened their credit lines for a number of Bangladeshi banks in recent months."

Among the corresponding global banking biggies are Mashreq Bank, Citi N.A, HSBC, Standard Chartered Bank, JP Morgan Chase Bank N.A, RAK Bank, First Abu Dhabi Bank, Emirates Nbd Bank Pjsc, Emirates Islamic Bank, Commerzbank AG, Duestsche Bank AG, Ajman Bank and Zuercher Kantonalbank.

Only Indian corresponding banks have not eased the credit supports for their Bangladeshi counterparts yet, probably because of the prevailing strained relations between the two next-door neighbours, the banker adds.

The inflow of foreign currencies, the American greenback in particular, continues to rise riding a remarkable growth in remittance and export receipts. And this rebound prompted the foreign banks to change their line- of-credit policies regarding Bangladeshi banks, according to him.

Managing Director and CEO of United Commercial Bank (UCB) Mohammad Mamdudur Rashid says many foreign banks either tightened or suspended their credit lines for Bangladeshi banks, including his one, after the shakeup in power through the mass uprising.

But they kept in touch with their foreign partners continuously sharing their target-centric plan of actions to improve the fundamentals of the bank.

Satisfied with the progress of the bank, he says, all the foreign banks have opened their lines of credit for UCB, which processes 7.0 per cent of the country's overall international trade.

"Apart from existing correspondent banks, new foreign banks have joined in the lines of credits, which is a good sign for the economy," says the experienced banker.

Managing director of Shahjalal Islami Bank Mosleh Uddin Ahmed says a top executive of Dubai-based Mashreq Bank called him last month and assured him supporting line of credits the respondent required in processing international trade.

"It clearly indicates that the confidence of foreign banks in their Bangladeshi peers continues to rise," the seasoned banker told the FE writer.

On condition of not disclosing identity, a BB official says rising inflow of foreign currencies over the last several months is bolstering the country's forex reserves despite clearing huge overdue import bills.

And it ultimately enhances banks' capacity to meet their overseas payment obligations in this post-import-compression regime, the official adds. "Look at net open position (NOP) of the banking sector, which keeps ballooning because of the rising forex inflow," the central banker cites an example.

In banking jargons, NOP represents the difference between a bank's foreign assets and liabilities. It reflects the bank's risk exposure to currency movements.

According to the central bank, the volume of NOP in banks came to around $1.10 billion now from $500 million recorded couple of months ago. The volume is the highest after the pandemic period of 2021.

The central bank's statistics also show the country's gross forex reserves still stand at $29.53 billion and $24.45 billion in accordance with BB and IMF calculations as on July 07 even after the payment of $2.02 billion in import bills through the Asian Clearing Union (ACU).​

 

[Saif]

BB governor asks banks to create forced loans

Governor of the Bangladesh Bank (BB) Dr Ahsan H Mansur has asked commercial banks to create forced loans against importers who have failed to make letter of credit (LC) payment on maturity dates. He gave the instruction at the bankers' meeting held on Tuesday in light of reports that some banks ar

thefinancialexpress.com.bd

Importers' failure to clear LC payments
BB governor asks banks to create forced loans
Executives of commercial lenders alerted to money laundering through under-invoicing

FE REPORT
Published :
Jul 09, 2025 09:50
Updated :
Jul 09, 2025 09:50

Governor of the Bangladesh Bank (BB) Dr Ahsan H Mansur has asked commercial banks to create forced loans against importers who have failed to make letter of credit (LC) payment on maturity dates.

He gave the instruction at the bankers' meeting held on Tuesday in light of reports that some banks are not complying with the directive to create forced loans to cover LC payments, which may cause the country to lose its reputation overseas, according to meeting insiders.

The central bank high-ups also asked the top executives of commercial lenders to be careful so that no exporter can get the opportunity of money laundering through under-invoicing.

Seeking anonymity, a central bank official who attended the meeting said a circular issued earlier instructed banks to craft forced loans against importers for failing to fulfil LC payment obligations.

But there are a few banks that do not follow the directive and try to clear LC payments in other ways. Thus the country may lose its reputation abroad due to payment delays, he said.

"That is why the governor emphasised it," he added.

Emerging from the meeting, Managing Director and Chief Executive Officer of Mutual Trust Bank Syed Mahbubur Rahman said the central bank asked bankers to remain alert to avert any possible incident of money laundering through under-invoicing during exports.

The experienced banker said the regulator also suggested that bankers create awareness among the people to popularise digital payment tools in order to discourage cash usage and achieve the greater objective of creating a cashless society.

He also said the central bank informed them that the inflationary pressure had started easing in recent months, though the target has not been achieved.

"But the Bangladesh Bank is confident about bringing down inflation to its targeted levels in the coming months," added Rahman.

Commercial banks' over-reliance on government securities was also discussed at the meeting. The banking regulator advised bankers to spread the holdings of treasury bills and bonds to the retail level to reduce liquidity pressure on banks.

Meeting sources also said the central bank shared its initiative to create a special fund of Tk 250 million for the families of those killed in the 2024 July-August mass uprising and also the treatment of the injured victims.

Of the total fund, the central bank alone will contribute Tk 140 million from its own resources, while banks have been asked to provide the rest.​

 

[Saif]

ICB Financial Group warns of legal action, writes to BB governor

The foreign group said they expect response to the situation urgently, otherwise they have no other alternative but to go to the International Court.

en.prothomalo.com

ICB Financial Group warns of legal action, writes to BB governor

Staff CorrespondentDhaka
Published: 12 Jul 2025, 21: 33

Switzerland-based ICB Financial Group purchased 53 per cent of shares in ICB Islamic Bank (formerly Oriental Bank) through an open auction called by Bangladesh Bank, but the group no longer holds control over the bank.

The foreign group invested Tk 3.5 billion in the bank in 2008 in compliance with the auction terms.

Meanwhile, former investors of Oriental Bank filed lawsuits, thus, withholding the sale and purchase of the bank’s shares.

As a result, ICB Financial Group's investment in the bank got stuck. As the financial condition of ICB Islamic Bank continued to deteriorate, Bangladesh Bank dissolved the bank’s board of directors in April this year.

Currently, a central bank official is serving as chairman and managing director of the bank.


Amid this situation, ICB Financial Group sought compensation, losing control over ICB Islamic Bank. The Switzerland-based group demanded the return of its investment, if they do not get full control of the bank.

Otherwise, they will go to the international court for settle the dispute.

Josephine Sivaretnam, chairman of ICB Financial Group Holdings AG (ICBFGH), sent a letter to Bangladesh Bank governor Ahsan H Mansur, informing the latter in detail.

Copies of the letter were sent to Finance Advisor Salehuddin Ahmed and Bangladesh Investment Department Authority chairman Chowdhury Ashik Mahmud Bin Harun (Ashik Chowdhury).

The letter said, “We expect your response to the above-stated situation urgently, otherwise we have no other alternative but to go to the International Court to seek justice.”

The letter said, “We draw your kind attention to the Share Sale and Purchase Agreement dated 28 February 2008 signed by ICB Financial Group Holdings AG (ICBFGH), The Purchaser, the Oriental Bank Ltd. (OBL) and Bangladesh Bank (BB) and hereinafter referred to as "the Agreement’.

Pursuant to clause 2.2 of the Scope of the Agreement, it was provided, inter alia, that BB shall instruct OBL to, and OBL shall issue, and the Purchaser shall subscribe, the Shares, free from any Encumbrance and with all rights attached or accruing to them on and after the date of this Agreement.

Additionally, clause 1.1.2 of Schedule 2 of Representation and Warranties provided that the shares are free from any Encumbrance and there are no arrangements in force or claimed entitling or allegedly entitling any person to any Encumbrance. With this assurance ICBFGH invested a sum of about Tk 3.51 billion (Tk 350.67 crores) in the then OBL, now ICB Islamic Bank Ltd, in 2008.

“But this assurance was belied by the fact that the erstwhile shareholders of OBL filed several cases against BB and challenged the legality of the forfeiture of their shares by BB. These cases are still pending at the Supreme Court and we are of the view that ICBFGH's interests are not safeguarded and BB is not taking adequate steps to resolve these legal hurdles. We are also of the view that BB is in breach of its obligations under the Agreement, and therefore the Agreement is null and void,” it reads.

The letter further stated, “The interests of ICBFGH shareholders have been consistently compromised and at no point in time, has BB been able to give comfort to the present shareholders that their investment in the Bank is safe and secured, and that they are truly the majority shareholders of the Bank and that their shares are unencumbered. Furthermore, BB has not yet given its approval for the appointment of the new Managing Director/CEO of the Bank as proposed by the Board and application submitted on 2 February 2025. Rather, BB has taken control of the Bank by dissolving the Board of Directors of the Bank and engaging one of its staff to run the affairs and business of the Bank.”

“With this insecure and tentative feeling no investor(s) or shareholder(s) would venture to inject any additional capital into the Bank. In fact, not just the present shareholders, any strategic investor(s) would hesitate to make fresh investment(s) in an organisation where uncertainty of ownership continues unabatedly. The ruling of the High Court not to sell/transfer the shares acts as an unlawful restraint to freely deal with their shares and no Strategic Partner would want to inject capital without a proportionate stake/share in the Bank, which the High Court ruling obviates,” the letter said.

Regarding this, Bangladesh Bank spokesperson Arif Hossain Khan said ICB Financial Group invested in this bank enthusiastically, and it would be best if a legal resolution can be reached now with the assistance of the state.​

 

[Saif]

Dollar rebounds against taka after Bangladesh Bank intervention

The maximum dollar rate in the country's currency market on Tuesday was Tk 121.50, and the minimum was Tk 120.80.

en.prothomalo.com

Dollar rebounds against taka after Bangladesh Bank intervention

UNB
Published: 15 Jul 2025, 21: 42

US Dollar notes File photo

After four consecutive days of depression, the US dollar strengthened against the Bangladeshi taka on Tuesday.

Following intervention of Bangladesh Bank to stabilise the foreign exchange market, the dollar appreciated by Tk 1.40 in a single day on Tuesday.

According to Bangladesh Bank data, the maximum dollar rate in the country's currency market on Tuesday was Tk 121.50, and the minimum was Tk 120.80. This marks a notable increase from Monday's rates, which were Tk 120.10 (maximum) and Tk 119.50 (minimum).​