Reforming the banking sector
Bangladesh
Bank has recently taken an unprecedented step in restructuring some banks. This
move will only bring real benefits if individual banks carry out their own
internal reforms.
Banking
reform is often confused with regulatory oversight. Regulators set the legal
charters and provide policy support, but reform is a self-motivated task
carried out by banks through constant, organised effort. Reform is most
effective and sustainable when it comes from within. Just as charity begins at
home, reform must begin at the boardroom tables of our banks. The maxim is not
only a moral lesson, it is a powerful metaphor for institutional reform. That
is my core argument.
Reform is
needed in governance, processes and moral regeneration. In this effort, the
Bangladesh Association of Banks (BAB), and in particular the forum of bank
chairmen, bears a critical responsibility. As thought leaders and custodians of
their institutions, bank chairpersons are in a unique position to lead by
example.
History
offers lessons. In 1972, the country was war-torn, with broken roads, destroyed
bridges and no banking resources. Senior Bengali central bankers were stranded
in West Pakistan. Banks had no overseas accounts (NOSTRO) to transact foreign
trade, no monetary reserve, and no cross-border credibility. A vacuum in policy
and power lasted for months.
Today, by
contrast, Bangladesh has first-rate infrastructure, a dependable core banking
system, workable reserves, and robust central banking support. What is lacking
is a determined workforce driven by governance standards.
After
independence, banking was coordinated by strong nationalism and determination
to achieve results comparable to the liberation victory. This moral strength
brought a second conquest that bankers still cherish.
Now,
however, many bankers face moral conflict. Conversations with them reveal a
dilemma. Their defensive silence in the past cannot turn into truth-telling
voices overnight. After systemic change, many remain in what I call a
post-corruption vacuum of moral uncertainty. They know the old ways were wrong,
but they are unsure which of the new choices are right. They need an inner
moral ground to stand again, guided by internal leadership.
The forum
of bank chairmen also carries a troubled legacy. For a time, it was dominated
by self-seekers, leaving behind a stigma that must be shed.
By
contrast, the ethical model was once set by the Bankers Consultative Committee
(BCC) of 1972. Convened by the then finance minister to shape the banking
sector, the BCC was chaired by a senior central banker who later became
governor of the Bangladesh Bank, with top bankers as members. If BAB could
adopt the historical work ethic of the BCC, it could become the conscience
keeper of the banking industry.
Consider
this: foreign banks operating in Bangladesh under the same laws consistently
demonstrate strong credit quality, compliance and operational discipline. Local
banks, by contrast, often stumble. The difference does not lie in the laws but
in internal culture, governance and ethics. Domestic banks struggle with
political interference, weak controls and lax accountability. BAB has the power
to change this culture by setting examples. We must remember that on the same
soil, some flowers bloom and others fade, not because of the weather but
because of how they are cultivated.
This is a
plea not to regulators, but to leaders within the banking sector. The greatest
reward for the bank chairmen forum lies not in dividends, but in seeing their
institutions grow with dignity. Just as charity begins at home, sustainable
banking reform must come from within.
















