Written by The Banking Post
Bangladesh Bank has proposed retaining only two state-owned banks while merging the remaining government lenders as part of a broader effort to restore discipline and governance in the banking sector, Governor Ahsan H Mansur said on Wednesday.
Speaking at a discussion on the banking sector’s challenges and outlook at Jagannath University, the governor said Bangladesh’s banking system has become excessively large, with 61 banks currently in operation. “For a country like ours, 10 to 15 banks would be more than enough,” he said, adding that fewer banks would make effective supervision and good governance easier to enforce.
Mansur blamed criminal activities, irregularities, family dominance, and prolonged governance failures for the sector’s deterioration. He said around Tk 3 lakh crore has flowed out of the banking system, with a significant portion likely laundered abroad. An estimated $20–25 billion, he added, was siphoned off through family control within banks.
“The sector has collapsed due to the absence of proper governance,” the governor said, stressing that personal or individual-centric decision-making must not be allowed to influence banking operations. He called for urgent, comprehensive reforms across the sector.
On asset quality, Mansur said the non-performing loan ratio is expected to decline to about 25 percent by March, but cautioned that political interference could resurface if amendments to the Bangladesh Bank Order are not enacted.
He also said the central bank is working to establish a Bank Resolution Fund of Tk 30,000–40,000 crore, which will cover both banks and non-bank financial institutions.
Highlighting the importance of moving toward a cashless economy, the governor said cash remains the main channel for revenue leakage. “If a cashless system can be established, annual revenue collection could rise by Tk 1.5 lakh crore to Tk 2 lakh crore,” he said, urging that all students be brought under formal banking services.
Jagannath University Vice-Chancellor Prof Dr Rezaul Karim, speaking as a special guest, said the fragility of the banking sector has now become evident and credited the current governor with helping steer it away from near collapse.
Economics Department Chairman Prof Dr Sharif Mosharraf Hossain said rising default loans have constrained banks’ lending capacity, dampening investment, and called for stricter monitoring of the sector.
The event was jointly organised by the Bangladesh Economic Association and Jagannath University’s Department of Economics, with academics, students, and association leaders in attendance.
