Bangladesh cannot prevent a broader economic collapse unless the ongoing crisis in the banking sector is resolved, former caretaker government adviser Hossain Zillur Rahman said on Saturday.
Speaking as chief guest at a seminar titled “The Collapse of Bangladesh’s Banking Sector: The Context of Islamic Banking, Its Impact on the National Economy and the Way Forward,” Rahman said the country’s financial system has reached a critical point and requires bold political and economic decisions.The seminar was organized by the Bank Customers Forum at the CIRDAP Auditorium in the capital.
Political Decisions Needed: Rahman said the banking crisis cannot be solved through technical measures alone.”This crisis requires political decisions,” he said. “Economic decisions are heavily influenced by politics.”
He questioned why certain legal provisions were being introduced that could allow individuals accused of causing banking sector problems to return to positions of influence.
Six Areas of Consensus: According to Rahman, there is broad agreement on six major realities facing the economy: The economy is in distress. Corrupted policymaking accelerated the crisis and continues to do so. Depositors are suffering quietly.Economic activity remains stagnant, investment is weak and unemployment is rising.The current turmoil presents an opportunity for meaningful reform.A sustainable solution must be based on high ethical standards.
He warned that many depositors are still unable to withdraw their savings, undermining confidence in the banking system.
Central Bank Independence Essential: Rahman stressed that Bangladesh Bank must be granted greater autonomy to restore trust and enforce accountability. “We need to ensure that the regulator can operate on the basis of ethical standards and professional judgment,” he said. He added that solving the unemployment crisis is equally important, as prolonged joblessness could create wider social instability.
Calls for Tough Action: At the seminar, former Trust Bank Managing Director Faruk Moinuddin said the banking sector cannot be repaired without strong political commitment. “Looting in banks must be identified separately and addressed decisively so that institutions can move forward,” he said.
‘A Thriller Story of Bank Capture’: Badiul Alam Majumdar, secretary of SHUJAN, said the scale of irregularities in the sector is so dramatic that it could inspire a thriller movie. “The banking sector is one of the main engines of the economy. When this sector is looted, the entire economy suffers,” he said.
Majumdar said long queues at banks and public anxiety over deposit safety reflect a deep confidence crisis. He called for exemplary punishment for those responsible and urged authorities to continue restructuring weak banks. He also recommended reducing the use of cash and repealing controversial provisions in the new Bank Resolution law.
Islamic Bank Customers Voice Concerns: Customers and professionals associated with Islami Bank Bangladesh PLC and Social Islami Bank PLC said political decisions enabled the takeover of several Islamic banks.
They argued that even a 2 percent shareholding should not be sufficient to gain effective control over a bank. Participants warned that if further instability occurs at Islami Bank, customers themselves would organize to resist any renewed attempts to undermine the institution.
Banking Sector at a Crossroads: The seminar underscored growing concern over loan fraud, governance failures and depositor insecurity in Bangladesh’s financial system. Speakers agreed that restoring confidence will require independent regulation, stronger ethics, institutional accountability and swift legal action against those responsible for large-scale irregularities. Economists say the success of banking sector reforms will be crucial in determining whether Bangladesh can stabilize its economy, revive investment and create jobs in the years ahead.
