The Governor of Bangladesh Bank, Dr. Ahsan H. Mansur, addressed the country’s financial sector’s advancements over the past five decades, acknowledging its progress but highlighting that it has not yet reached its full potential. Speaking at the golden jubilee celebrations of the Bangladesh Institute of Bank Management (BIBM), Mansur emphasized the need for greater fulfillment of shared responsibilities in the sector, which he argued has not been fully realized.
Mansur called for deep self-reflection within the banking sector, urging industry professionals to uphold integrity and ethical standards. “Banking requires not only experience but also honest, humane, and ethical bankers,” he said, stressing that financial success without moral grounding can lead to misfortune. He further encouraged the adoption of international banking practices and placed particular emphasis on sustainable and green financing as critical to the future of banking in Bangladesh.
The governor also pointed out a significant issue: substantial amounts of funds at the central bank remain untapped, primarily due to a lack of interest from commercial banks. He identified green banking and financial inclusion as urgent areas for improvement, particularly addressing the growing challenges of climate finance. “BIBM must focus on sustainable finance. Otherwise, the banking sector cannot move forward,” Mansur asserted. He recommended focusing on training in areas such as small and medium enterprises (SME) finance and eco-friendly banking practices.
Stricter Measures Needed for Loan Defaults
In the plenary session titled “Past, Present, and Future of Banking,” Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), expressed concern over the growing issue of wilful loan defaults in the banking sector. Rahman condemned such defaults as a financial and ethical crime, noting that while non-performing loans (NPLs) could stem from genuine difficulties, wilful defaults are deliberate acts of theft. He called for the establishment of a more robust system to prevent this issue, which he said tarnishes the reputation of the entire banking system.
Rahman also highlighted the need for improved governance in the banking sector, suggesting that better governance would help boost key sectors like agriculture, services, and IT-enabled industries. He pointed to the discrepancy between the agricultural sector’s large share of the workforce (42%) and its small contribution to the nation’s GDP (12%), a clear indication of low productivity. “We must prioritize financing for high-potential sectors such as services and IT to drive sustainable economic growth,” he said.
Addressing Financial Crimes and Corruption
BIBM Professor Dr. Shah Md. Ahsan Habib, who presented the keynote paper, raised concerns about the rising levels of corruption and financial crimes within the banking sector. He particularly cited wilful loan defaults as a major issue, undermining public trust and creating a ripple effect across the financial system. “Loan defaults, often stemming from the misuse of depositors’ funds by major defaulters, have damaged the integrity of the financial system,” he said.
Habib stressed the need for a paradigm shift in the country’s banking system. He argued that Bangladesh’s banking sector requires a fundamental transformation, rather than mere reforms, to achieve long-term stability and sustainability. This, he said, could be achieved through government involvement, technological integration, and innovative financial solutions that promote broader financial inclusion.
Training and Development Initiatives
Mashrur Arefin, Managing Director of City Bank, highlighted the significance of the partnership between City Bank and BIBM, noting that the bank’s staff had received 17,028 hours of training in 2024 alone. “BIBM is not just a think tank; it is evolving with time, shaping skilled professionals and fostering corporate governance,” Arefin said.
Reflecting on BIBM’s 50-year journey, Director General Dr. Md. Akhtaruzzaman shared the institute’s milestones, including collaborations with international organizations like the International Federation of Accountants (IFAC) and the World Bank. He praised BIBM’s contribution to research and the professional development of the banking sector.
Looking Ahead: Governance and Structural Reforms
In his closing remarks, Professor Habib proposed several key strategies to address the challenges facing Bangladesh’s banking sector. These included stronger measures to combat wilful loan defaults, stricter oversight to tackle money laundering, and increased support for the agriculture and SME sectors. He urged for continued reforms that would build a more resilient and transparent banking system, one capable of supporting the country’s evolving economic needs.
As Bangladesh’s financial sector continues to evolve, these discussions underscore the critical need for improved governance, ethical banking practices, and a more inclusive, sustainable approach to financing. With the right measures in place, Bangladesh’s banking sector can reach its full potential and contribute more effectively to the nation’s economic growth and development.
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