Dhaka, August 12 — The Center for Policy Dialogue (CPD), a prominent non-governmental research organization, has raised serious concerns about the state of the banking sector in Bangladesh. According to the CPD, several banks in the country are "clinically dead," while others are on the brink of collapse. The organization recommends that struggling banks be reformed or allowed to "die naturally."

During a press conference titled "What to Do to Bring Back Good Governance in the Banking Sector," held at the CPD office in Dhanmondi, Executive Director Fahmida Khatun stressed the urgency of overhauling the sector. She suggested that the management and boards of directors of failing banks should be completely restructured as a final attempt to revive them. However, she acknowledged that many banks have reached a point of no return and should be allowed to cease operations rather than being kept afloat by government bailouts.

"The government has been replenishing these banks with money and capital, but they are beyond saving," Fahmida Khatun said. "It's time to let these 'clinically dead' banks die naturally."

The CPD highlighted that the entire banking sector has spiraled out of regulatory control, with Bangladesh Bank being accused of working in the interests of specific individuals and groups rather than the broader economy. Over the past decade, the sector has witnessed 24 major financial scandals amounting to Tk 92,261 crore, severely undermining public confidence.

Fahmida Khatun criticized Bangladesh Bank's failure to raise interest rates to curb inflation, arguing that the central bank's policies have favored special business groups at the expense of ordinary citizens, who have been suffering from high inflation for the past two years.

The CPD also pointed out that many banks have failed to meet international standards, particularly those outlined in the Basel principles, which set guidelines for capital adequacy and risk management.

Mostafizur Rahman, an Honorary Fellow of CPD, called for the formation of a banking commission to address the sector's deep-rooted issues. He also recommended shutting down the Financial Institutions Department of the Ministry of Finance to eliminate the dual administration currently plaguing the banking sector.

The CPD specifically mentioned the S Alam Group, which reportedly owns seven banks and has borrowed Tk 30,000 crore from Islami Bank. Additionally, Janata Bank was criticized for lending Tk 10,000 crore to Enontax Group, in violation of the loan limit policy for a single customer.

"Once upon a time, Islami Bank was a good bank," the CPD said. "But after its takeover, it has also fallen into decline."

The CPD's findings underscore the urgent need for comprehensive reforms in Bangladesh's banking sector to restore good governance and ensure the sector's long-term stability.