Mirpur:Eminent economist Dr. Wahiduddin Mahmud delivered a critical analysis of Bangladesh's banking sector at the 11th Annual Bank Conference, shedding light on the longstanding systemic issues that have plagued the financial architecture of the nation. The event, organized by the Bangladesh Institute of Bank Management (BIBM), emphasized the severe consequences of structural failures and political patronage on the banking sector.
According to United News of Bangladesh, Dr. Mahmud dissected the decline of the banking sector into two distinct periods the initial loan-default culture and the subsequent post-2010 era marked by rampant bank looting. He highlighted the alarming rise in non-performing loans (NPLs), which reached Tk 6.07 lakh crore by mid-2026, representing 32.78 percent of total disbursed loans. This situation places Bangladesh among the countries with the highest default rates globally.
Dr. Mahmud pointed out that past regulatory frameworks had successfully elevated private banks to international standards. However, the absence of robust anti-trust laws allowed vested interests to exploit loopholes, leading to unchecked looting of financial institutions. The collapse of these institutions has had severe repercussions, with public sector and institutional deposits, including teachers' salaries and pension funds, being affected.
The economist also criticized the use of state-owned banks for political favors, emphasizing the detrimental impact on the national economy. He noted that insulated central bank autonomy and governance reforms are crucial for breaking the cycle of political influence over the financial sector.
As Bangladesh faces liquidity stress and high default ratios, Dr. Mahmud cautioned against relaxing regulations without ensuring that capital reaches genuine entrepreneurs. He stressed the importance of cultivating an ethical compass in corporate, banking, and political leadership to prevent future crises.
Source United News of Bangladesh