Dhaka:Eminent economist and former Dhaka University economics professor Dr. Wahiduddin Mahmud has called for an end to the use of state-owned banks as instruments of political patronage. He emphasized the need for political decisions to prevent the unjustified distribution of benefits within the banking sector.
According to Bangladesh Sangbad Sangstha, Dr. Wahiduddin Mahmud made these remarks while addressing the 11th Annual Banking Conference (ABC) 2026, organized by the Bangladesh Institute of Bank Management (BIBM), where he served as the chief guest. He highlighted that political patronage should not compromise the banking and financial sector, which he described as the "heart of the entire economy."
Dr. Mahmud noted that past reforms in Bangladesh's banking sector had succeeded in reducing loan defaults, bringing private banks closer to international standards. However, a relaxation of regulations over the past decade and a half has led to a new crisis, characterized by unchecked financial misconduct. He warned that the continuation of such trends could result in further distress within the sector.
To address the current challenges, Dr. Mahmud suggested that some banks might need refinancing and regulatory flexibility, provided there are adequate safeguards. He stressed the importance of evaluating entrepreneurs and businesses individually before offering financial assistance to prevent past errors.
Dr. Mahmud also emphasized the necessity of maintaining ethical standards among bankers and industrialists to ensure effective governance in the banking sector. He pointed out that merely implementing rules and regulations without ethical practices would not yield the desired outcomes.
Addressing the issue of state-owned banks, he remarked that despite improvements in private banking, longstanding issues persisted within these institutions due to their use for political patronage. He urged the government to recognize the damaging effects of such practices and to keep the financial system free from political influence.
Dr. Mahmud concluded with a call for learning from past experiences to avoid repeating mistakes in the financial and banking sectors, expressing hope for a more stable and ethically governed financial environment in the future.