For years, anyone sitting in the executive suites of a Bangladeshi bank knew there was a melody playing in the background. It was fast, energetic, and slightly chaotic.
Like the famous quote from the CEO of Citigroup during the 2008 global financial crash, our industry "continued to dance as long as the music was on."
Today, that music has gone out of tune. The rhythm has broken, and the dancing has stopped.
With recent tremors shaking the massive banking pillars and putting the future of prominent corporate giants under a microscope, it is easy to look at the headlines and feel a sense of impending doom.
When the public sees depositors queuing outside Islami Bank Bangladesh PLC, or reads about an ungodly Tk26,600 crore debt exposure linked to a single conglomerate, the casual observer is bound to ask: Is this the end for Bangladesh’s banking sector?
The short answer is no. This isn’t the end. It is something far more necessary: The painful, long-overdue end of an illusion, and the beginning of a grounded, healthier reality.
To understand how we arrived here, we have to look past complex balance sheets and see the banking sector for what it became -- a marketplace stretched far too thin.
With over 60 commercial banks operating in a space where major developed economies rely on a fraction of that number, our lending market became aggressively borrower-friendly.
Banks were starving for profit; corporate groups were hungry for capital.
In that rush, the system developed structural blind spots.
We fell into the trap of "name lending" -- underwriting multi-billion Taka loans purely against a company’s historic brand image rather than hard risk assessment.
The current crisis involving City Group is a textbook example of this collective lapse in judgment. Lenders extended an astonishing Tk24,774 crore (reaching an aggregate exposure of Tk26,600 crore across 36 domestic and foreign banks) to finance an aggressive, simultaneous expansion into six major industrial units.
No one paused to look at the reality of the country's energy crisis.
The infrastructure built with thousands of crores sat idle because there was no gas to turn the machines on.
It brings to mind the old, dark humour of inspectors visiting storm-damaged ship-breaking yards or flooded electronics factories only to find empty expanses.
The assets, much like the famous modern art painting of “a goat eating grass where both the goat and grass have vanished,” were simply gone.
For nearly two decades, these vulnerabilities were covered up through "hilla loans" -- temporary paper fixes where funds were shifted from one client's account to patch another's deficit just before the year-end books closed.
The fan was spinning fast, and we ignored the warning of a wise, old first-generation board director: “The fan is turning now. When it stops, only then can you count how many blades are left.”
The fan has finally stopped.
Restructuring and reform
What we are witnessing right now is not a collapse, but an unprecedented institutional intervention.
Look at how the industry is responding to the City Group crisis.
Instead of panicking and triggering a catastrophic domino effect across 36 lenders, the sector’s top executives, with the backing of the central bank, have united to design a structured rescue framework.
They are implementing global restructuring models: Appointing independent auditors, establishing a collective escrow account, and utilizing a waterfall mechanism to ensure that 80% of revenues go right back into keeping factories running and saving 25,000 jobs, while the remaining 20% pays down the debt.
This isn't a story of fraud or siphoning money abroad; it is a genuine, severe liquidity crunch being managed with collective, adult supervision.
When an industrial titan like City Group -- a corporate behemoth supplying up to 40% of the nation's staples -- is forced to seek emergency policy support for the first time in its 50-year history, it is easy to point fingers at structural energy deficits or macroeconomic shocks.
It is a sobering reminder that when banking leadership substitutes basic due diligence with sentimental reliance on a borrower’s historical prestige, they aren't just financing a crisis -- they are actively engineering it.
Similarly, the cash crunch at Islami Bank -- driven by the sudden exposure of historical, politically backed irregularities -- is met with active stabilization.
The central bank recently stepped in with emergency liquidity support to ensure cheque clearing operations resumed.
The banking sector is finally facing its demons, treating the infection rather than hiding the fever.
The silver lining
Seeing the cracks open up is terrifying, but it is also the only way to rebuild a fractured foundation.
There are three fundamental reasons why this crisis is a temporary phase rather than a terminal failure:
Moving forward
This darkness isn't a death sentence; it is a sharp, corrective business cycle amplified by years of delayed accountability.
The coming months will undoubtedly reveal more structural bruises as old balances are laid bare.
But once the debris of the past years is cleared away, what remains will be a leaner, wiser, and infinitely more stable financial system.
The music has stopped, yes. But it gives us the perfect opportunity to finally build a financial stage that stands on solid ground.
Wafiur Rahman looks after the business desk at Dhaka Tribune.
