In a brazen violation of corporate governance laws and central bank mandates, nearly 500 board directors across 42 private commercial banks have systematically siphoned off Tk 2.08 trillion ($20.8 billion) in loans, pushing Bangladesh’s banking sector into an unprecedented liquidity crisis.
Exploiting entrenched political clout and regulatory loopholes, these influential board members—who largely double as commercial magnates—have maintained clean credit profiles through token repayments while continuously expanding their borrowing limits.
Under existing Bangladesh Bank regulations, an individual director is permitted to hold between 2% and 10% of a bank’s equity, capped at a paid-up value of Tk 500 million.
By law, a director’s total borrowing limit from their own institution cannot exceed 50% of their shareholding value, or Tk 250 million. Applied across 500 directors in 42 private banks, the total permissible credit ceiling legally stands at Tk 125 billion (Tk 1,250 crore), relevant sources revealed.
However, central bank audit files confirm that actual director-held debt has ballooned to Tk 2.08 trillion—more than 16 times the statutory limit. Independent legal analysts and economists have characterized the systemic breach as illegal financial extraction.
Central bank historical data tracks a decade of unchecked credit expansion:
Total director-linked debt stood at Tk 900 billion in 2016.
June 2024: Debt peaked at a historic Tk 2.35 trillion under the previous political administration.
December 2025: Credit exposure marginally contracted to Tk 2.07 trillion under the interim administration. Mid-2026: Total director borrowing rebounded upward to Tk 2.08 trillion.
Managing directors of commercial banks privately express severe helplessness, citing reciprocal lending arrangements (“back-to-back” cross-banking loans) among board directors that effectively bypass single-borrower exposure limits.
Commenting on the crisis, Dr. Salehuddin Ahmed, former Governor of Bangladesh Bank and former Finance Adviser, asserted that the culture of impunity must end: “Being a bank director does not grant an automatic waiver. Chief executives must firmly enforce recovery measures rather than pleading powerlessness, escalating unresolved cases directly to the Central Bank for regulatory intervention.”
Dr. Mustafizur K. Mujeri, former Chief Economist of Bangladesh Bank, emphasized that directors must be held to the same collateral standards as ordinary borrowers: “Unholy alliances between board members and bank management have critically eroded public confidence in the banking system.”
Confirming that regulatory investigations are warranted, Arif Hossain Khan, Executive Director and Spokesperson for Bangladesh Bank, questioned how defaulted borrowers continue to retain directorship seats despite explicit legal prohibitions.
Responding to the allegations, Abdul Hai Sarker, Chairman of the Bangladesh Association of Banks (BAB) and Chairman of Dhaka Bank, defended the sector: “Loans are sanctioned following strict due diligence and regulatory compliance. Holding a directorship position should not disqualify an individual from accessing legitimate credit facility under the Bank Company Act.”
