News Flash
DHAKA, Jan 22, 2026 (BSS) - Finance Adviser Dr Salehuddin Ahmed today said that a comprehensive reform of the country’s banking sector is unavoidable and critically important for safeguarding macroeconomic stability, restoring discipline in financial institutions, and ensuring sustainable growth.
The Finance Adviser said this while addressing at a MTB-FE Roundtable as the chief guest on ‘Banking Sector Reforms’ held at a hotel in the capital today.
The Adviser said that most banking-related issues primarily fall under the mandate of Bangladesh Bank, although close coordination with the Ministry of Finance remains essential. He acknowledged that the sector is facing long-standing structural and governance challenges which have accumulated over the last decade and a half.
“These problems didn’t arise overnight, and they can’t be fixed within 14 or 16 months,” he said, adding that institutional decay, weak enforcement of laws, erosion of compliance culture, and misuse of discretionary authority have severely affected the sector.
Correcting these weaknesses, he stressed, requires time, careful planning, and strong institutional reforms rather than abrupt or coercive actions.
The Adviser said that despite domestic criticism, Bangladesh’s image in the international arena remains largely positive. Development partners and global stakeholders, he noted, generally view the country as having a manageable economy, although they acknowledge that reforming the banking and financial sectors is a difficult but necessary task.
Referring to recent legislative initiatives, he said the government has already taken steps to strengthen the legal framework governing the financial sector.
Amendments to laws related to Negotiable Instruments Act and the House Building Finance Corporation Act have been passed, while work on strengthening anti-money laundering legislation and improving the effectiveness of financial courts is ongoing.
He pointed out weak prudential norms, non-compliance with regulations, ineffective supervision, and excessive influence of bank owners over management have been among the key factors behind the sector’s fragility.
In many cases, he said, banks were not run according to accepted norms of corporate governance, which undermined transparency and accountability.
Highlighting the role of audits and oversight, the Adviser cited irregularities in audit practices and stressed the need for greater responsibility and professionalism among auditors and regulatory bodies.
He said accountability must be enforced across all institutions to prevent financial misconduct and protect public interest.
On the issue of central bank autonomy, the Adviser said Bangladesh Bank requires adequate operational and administrative independence to perform its duties effectively. However, he emphasized that such autonomy must be balanced with accountability within the sovereign framework of the state.
The Adviser underlined the importance of appointing competent and credible leadership in the banking sector, particularly at the central bank. Transparent and merit-based selection processes, he said, are crucial to ensuring effective supervision and sound policy implementation.
Concluding his remarks, the Adviser said banking sector reform is not optional but a national necessity.
Even if all reforms cannot be completed within the current timeframe. He added that the government is committed to laying a solid foundation so that future administrations can continue the reform process without disruption.
“The banking sector is the backbone of the economy. Strengthening it is essential to protect depositors, maintain financial stability, and support long-term development,” he said.
