Dhaka:Renowned economist Wahiduddin Mahmud has criticized Bangladesh's banking sector, stating that it was initially weakened by a culture of default loans, which later transformed into a "bank looting culture" after 2010, leading to the sector's current crisis.
According to United News of Bangladesh, Mahmud made these remarks while speaking as the chief guest at the annual banking conference organized by the Bangladesh Institute of Bank Management (BIBM) in Dhaka. He reflected on past banking reforms which required strict regulations and hard work, elevating several private banks to international standards, only for these gains to be later undermined by unchecked bank looting.
Mahmud warned that inadequate regulatory frameworks during the authorization of private banks allowed significant siphoning of deposits. He emphasized the need for anti-monopoly legislation to prevent a single entity from controlling multiple banks, a measure Bangladesh currently lacks. He also criticized the use of state-owned banks for political favors, urging political leaders to recognize the inappropriateness of such actions.
Mahmud highlighted issues such as the collapse of several banks due to the indiscriminate approval of new banks post-2010, affecting vulnerable depositors, including government-related funds. He labeled the relaxed banking regulations over the past 15 years as a contributor to current problems and advocated for restoring stringent vetting processes to ensure funds reach genuine entrepreneurs, thereby preventing a regression into past issues.
The conference also featured speeches from Bangladesh Bank Deputy Governor Md. Kabir Ahmed, Bangladesh Association of Banks Chairman Abdul Hai Sarker, World Bank Country Director Abdoulaye Seck, and Association of Bankers, Bangladesh Chairman Mashrur Arefin. The keynote paper was presented by Policy Research Institute Chairman Dr. Zaidi Sattar.