B Mirror Desk :  On Thursday, Ahsan H Mansur, the Governor of Bangladesh Bank (BB), stated that the central bank is vigilantly observing the activities of restructured bank boards and will take action if deemed necessary.

He cautioned that without the implementation of stricter classification rules, non-performing loans (NPLs) could escalate to 30 percent.”We are set to revise the classification rules to make them more stringent,” he remarked, indicating that the central bank is planning significant reforms to the Bank Company Act.

During the 22nd Nurul Matin Memorial Lecture on Ethics in Banking, the governor mentioned, “We aim to introduce a provision that restricts the number of board members from a single family to two, along with limiting their tenure.”The annual event was hosted by the Bangladesh Institute of Bank Management (BIBM) at its campus.

Mr. Mansur recognized that political backing will be crucial for executing the necessary reforms in the banking sector.He criticized the previous administration for nurturing a culture of unethical practices that left the sector in a deteriorated state. “We are working to rectify those issues,” he stated.He also pointed out that restructuring weak banks will pose a significant challenge.”Some may face liquidation, while others might require merging,” the governor noted, adding that the central bank is contemplating the appointment of foreign experts to aid in the process.

M Kabir Hassan, a finance professor in the Department of Economics and Finance at the University of New Orleans in the US, presented the keynote lecture titled “Roots and Repercussions: Unraveling the Ethical Crisis in Bangladesh’s Banking Sector.”He highlighted political interference, collusion, corruption, and weak governance as the primary factors contributing to financial instability in Bangladesh’s banking sector.He pinpointed political interference, collusion, corruption, and inadequate governance as the primary factors contributing to financial instability in Bangladesh’s banking industry.

The professor referenced significant banking scandals – including those related to BASIC Bank, Farmers Bank, Sonali Bank, and Islami Bank Bangladesh – to illustrate unethical behaviors such as politically motivated loan approvals, intentional defaults, and regulatory oversight failures.”These shortcomings have diminished public trust, destabilized the economy, and had a disproportionate impact on small enterprises and rural borrowers,” he remarked. He emphasized the necessity for stricter penalties, independent anti-corruption agencies, and improved protections for whistleblowers to tackle the crisis.

Furthermore, the professor cautioned that the repercussions of the banking sector’s ethical lapses encompass economic instability, decreased foreign investment, increased unemployment, inflationary pressures, and a loss of public confidence.

BB Deputy Governor Nurun Nahar and BIBM Director General Dr Md Akhtaruzzaman also addressed the gathering.