Over the past couple of years there has been a demand to set up a strong bank commission in order to restore order to the flagging bank sector. In the meantime there was an election and Awami League came to power once again. The finance minister was changed and the new minister AHM Mustafa Kamal was aware of this demand. In this 2019-20 budget speech he even said that the matter of forming a bank commission was being taken into due consideration.

It has been eight months since the budget speech, but there is still no sign of any bank commission. There hadn’t been any tangible meeting or discussion in this regard either. Speaking to the media at an event towards the end of February, AHM Mustafa Kamal had said that the commission would be formed. Economist Wahiduddin Mahmud had reportedly been consulted in this regard.


When Prothom Alo carried reports pertaining to a possible bank commission, an economist called to ask about the latest status of the commission and whether Wahiduddin Mahmud, as head of such a commission, would be compatible with the finance minister. In reply, the political will and commitment of the government could have been cited, but the question provoked apprehension. Does the government have the courage to form a strong bank commission under the prevailing circumstances?

Former finance minister Abul Maal Abdul Muhith himself said that permission for new banks had been provided on political consideration

Awami League has been over a decade at the helm of power and has displayed enviable success in the economic field. There had been good GDP growth and progress in many social indicators. But the financial sector has been in shambles. The sector has been rife with one loan scam after the other, misappropriation of funds, the crash of BASIC Bank, the Bangladesh Bank cyber heist, The Farmers Bank scandal, the liquidation of People’s Leasing, the repeated facilitation of bank owners, continuous consideration towards large loan defaulters, the exponential increase in default loans and more.

The latest in the line of scams is the story of International Leasing and Financial Services Limited (ILFSL), a non-bank financial institution. Under court order, former deputy governor of Bangladesh Bank Khondkar Ibrahim Khaled was appointed as head of ILFSL, but he soon realised that this institution was in no condition to be rescued and so he resigned.

This is the state of the country’s financial sector. And it does not take rocket science to determine where the responsibility lies for this predicament.


BASIC Bank has been a good bank but was torn down by its former chairman Sheikh Abdul Hye Bachchu. The government seems to have taken over the responsibility of protecting him. And it is the state-owned banks that have given indulgence to the massive loans scams of Hall-Mark, Bismillah Group, AnonTex and Crescent Group. The government has been responsible for appointing the board of directors and top officials of these banks.

Over the past decade, disorder has been created in the banking sector along with a coterie. Under these circumstances, a call is being made to create a bank commission. The finance minister is obliged to speak about this proposition. But will he ultimately be bold enough to create bank commission?

Former finance minister Abul Maal Abdul Muhith himself said that permission for new banks had been provided on political consideration. Once an important minister of the Awami League government, Mohiuddin Khan Alamgir, as chairman of Farmers Bank, was responsible for its crash. It was an institution of the government that helped in forming companies under false names to buy shares from the share market to take over the bank. Prasanta Kumar Halder, toeing the same line, took over four financial institutions in this manner, misappropriated Tk 35 billion and fled from the country. The attorney general himself said that a former deputy governor of Bangladesh Bank had aided and abetted him to this end. In order words, all of this was done with silent assent of the central bank.

And the facilities provided to the large loan defaulters and the benefits given to the banks owners, are all part of government decisions. So it is the government who must take responsibility for the predicament of the banking sector. It would be a bold step to form a bank commission at this juncture.

There have been bank committees or commissions in the past. It was in 1982 that a bank committee was first formed in the country. General Ershad had just taken over power and declared martial law. He told the nation that he would deal with the bank looters. Then a committee headed by brigadier A Qasem was formed to look into outstanding loans and other problems in the sector. Those who were accused in the report by the committee were later seen to be the fund providers for Ershad’s Janadal and later Jatiya Party. The motive behind forming the committee was obvious and was successfully met too. The party never suffered from the paucity of funds.

It was in 1984 that an effective bank committee was formed in the country. The previous year approval had been given for new banks in the private sector. There already had been nationalised scheduled banks and specialised banks. Default loans were on the rise and the idea about the state of loans was hazy. M Saiduzzaman was finance advisor at the time. He formed the first bank commission, ‘The National Commission on Money, Banking and Credit’. The bank submitted its report in 1986. The World Bank, based on this report, showed interest in implementing the financial reforms programme and talks began in this regard. Bu things were stalled with the onset of the anti-Ershad movement and two serious floods. Finally, finance by donors, the Financial Sector Reforms Programme (FSRP) was taken up in 1990, after the fall of Ershad. Its term was up till 1996.

All sorts of reform tasks were taken up under this programme, but the condition of the banks did not see much improvement. The propensity to take loans but not to return them continued in full swing. Then in 1996 Awami League came to power. In the very first year of the government, finance minister at the time Shah AMS Kibria formed a bank commission. The Wahiduddin Mahmud committee submitted its report in 1999. It contained certain stringent recommendations. The Awami League government didn’t have to take responsibility for the pitiful plight of the banking sector as it had been out of power for 21 years. The blame fell on the previous government and Shah AMS Kibria was lauded for the bank reforms committee.

In 2001 BNP came to power again and Saifur Rahman was finance minister again. He too came and lambasted the state of the banking sector. In his budget speech for the 2002-03 fiscal, he said disorder has been arisen during the tenure of Awami League government. Lack of interest and incapability in implementing the reform initiatives taken earlier in the sector was also shown then. And, he too made an announcement to form a committee to reform banks. But the committee had limited jurisdiction. It had the task of making recommendations analysing the problem of deault loans in state-owned banks. The committee made some recommendations as well.

The Wahiduddin Mahmud committee report gave an overall picture of the chaotic state of the country’s banking sector. Prior to that, the International Monetary Fund (IMF) had given a very bad report about Bangladesh’s banking sector. This report, ‘Bank in Distress: The Case of Bangladesh’ was published in 1990. In 2019 IMF came up with another report about the sector, in which it said there was a deep-rooted propensity among a certain class of people in Bangladesh to take loans but not repay these.

It said that wealthy influential businessmen with high-up connections did not feel the need to repay loans. Influential and powerful borrowers were making important decisions in the financial sector. Default loans are hidden, the central bank’s monitoring is weak, the behavior of the bank directors and managers is reprehensible and they are not punished when they violate the rules. Bangladesh’s bank sector is in a fragile state and faces a serious risk.

Over the past decade, disorder has been created in the banking sector along with a coterie. Under these circumstances, a call is being made to create a bank commission. The finance minister is obliged to speak about this proposition. But will he ultimately be bold enough to create bank commission?

* Shawkat Hossain is Special News Editor of Prothom Alo and can be contacted at This column appeared in the print edition of Prothom Alo and has been rewritten in English by Ayesha Kabir