বুধবার, ২৮ অক্টোবর ২০২৬, ০৬:৫৬ অপরাহ্ন
DHAKA, Oct 28, 2026 (BSS) – Eminent economist and former Dhaka University economics professor Dr Wahiduddin Mahmud today called for an end to the use of state-owned banks as instruments of political patronage and unjustified distribution of benefits.
“Political patronage should not be allowed to undermine the banking and financial sector,” he said while addressing the 11th Annual Banking Conference (ABC) 2026, organised by the Bangladesh Institute of Bank Management (BIBM), as the chief guest.
Describing the financial sector as the “heart of the entire economy”, Wahiduddin said banking and financial institutions should never be used to serve political interests.
Ultimately, the issue requires a political decision by the government, he added.
Referring to banking sector reforms, he said Bangladesh had previously made significant progress in overcoming the culture of loan defaults through reforms at Bangladesh Bank and in the banking sector, bringing a substantial portion of private banks closer to international standards.
However, the relaxation of certain regulations over the past 15 years had pushed the banking sector into another major crisis, he said.
Wahiduddin said some banks might require refinancing and necessary regulatory flexibility to overcome the current crisis.
Such support, however, must be accompanied by adequate safeguards, he added.
He stressed the need to assess genuine entrepreneurs and businesses on a case-by-case basis before extending financial assistance to prevent a recurrence of past mistakes.
Bangladesh’s banking sector had once been plagued by a culture of loan defaults, but a new and more serious problem had emerged after reforms helped address that challenge, he said.
“This is now a culture of bank looting,” he said, adding that the current situation had resulted from money being siphoned off from banks without regard for rules and regulations.
He said banks should be given the opportunity to recover and stand on their own feet through restructuring and refinancing, while strict safeguards must be maintained to ensure that financial assistance reaches eligible borrowers.
Otherwise, the banking sector could return to its previous state of distress, he warned.
Wahiduddin also emphasised that good governance in banking could not be ensured through rules and regulations alone. A minimum level of ethical standards among bankers, entrepreneurs and industrialists was equally essential, he said.
Without such ethical standards, even extensive regulatory controls would fail to deliver the desired results, he added.
Regarding state-owned banks, he said many longstanding problems remained unresolved despite improvements in several areas of private banking through reforms.
Successive political governments had long used state-owned banks as channels for distributing benefits to favoured groups, he said.
Although the extent of political patronage had varied over time, its impact on the banking and financial sector had been highly damaging, he added.
Wahiduddin said that if political considerations necessitated the distribution of benefits, the government should choose areas where such decisions would not harm the economy.
However, the banking and financial system, which serves as the heart of the economy, must remain beyond the reach of political patronage, he stressed.
He said neither Bangladesh Bank nor bankers alone could resolve the problem, as it ultimately required a political decision.
The government must recognise the consequences of using financial institutions for political purposes, he added.
Wahiduddin expressed hope that the government and relevant stakeholders would learn from the country’s recent changes and past experiences and avoid repeating earlier mistakes in the financial and banking sectors.
