Saturday, May 25, 2024


Dhaka Tribune

Will state-owned banks ever be a positive?

Strengthening regulatory frameworks and promoting transparency will not happen overnight

Update : 01 Dec 2023, 10:12 AM

To say Bangladesh’s financial sector has been struggling would be an understatement. Between ever-increasing default loans, liquidity issues, and the steady depreciating of the taka, it is difficult to be optimistic about the future health of the nation.

However, in the midst of all issues remains a constant: Underperformance by state-owned banks (SOBs).

State-owned banks by design play a pivotal role in shaping the financial landscape of Bangladesh, and it is unfortunate that their chronic underperformance has been a direct contributor to the eroding public trust in financial institutions.  

Furthermore, the culture of impunity that is all-too-familiar within these banks allows powerful individuals to exploit loopholes, evade responsibility, and get away with massive default loans and other financial malpractices that have a direct impact on the overall health of our nation.

The default loan epidemic is a glaring symptom of this malaise. Year after year, powerful individuals, often well-connected, exploit the system, securing loans without adequate collateral or repayment plans. The consequences are not merely financial; they ripple through the entire economy, burdening taxpayers and constraining the government's ability to invest in critical sectors.

Strengthening regulatory frameworks and promoting transparency will not happen overnight, but they are imperative if we are serious about safeguarding the future health of this nation. The relevant authorities must also empower regulatory bodies to hold those responsible for financial mismanagement accountable, regardless of their stature.

Of course, fostering a culture of accountability within not just SOBs but all our institutions necessitates a shift in mindset, where a commitment to ethical practices become the norm. However, it is only through a comprehensive and sustained effort to cleanse these malpractices can Bangladesh unlock the full potential of its financial sector and pave the way for robust economic growth.

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