Finance Adviser Dr. Salehuddin Ahmed on Monday said Bangladesh’s financial sector is overdependent on banks and underscored the urgent need to strengthen Bangladesh’s capital market and expand Sukuk bonds to reduce the dependency for financing both public and private projects.
“Bangladesh’s financial sector suffers from an over-reliance on bank borrowing where both private and public sector entities take loans, often default, and walk away without facing consequences. That is the tragedy of Bangladesh,”he said at a seminar in the capital.
The seminar on "Unlocking Bangladesh's Bond & Sukuk Markets: Fiscal Space, Infrastructure Delivery and Islamic Money Market Development" was jointly organised by Bangladesh Securities and Exchange Commission & Dhaka Stock Exchange PLC.
He stressed that a functional capital market with active private sector participation is crucial for risk-sharing in large projects.
“People must understand that investing in bonds, debentures and securities involves risks. The capital market is not a source of perpetual guaranteed income,” he said.
He urged the Dhaka Stock Exchange (DSE) and the Bangladesh Securities and Exchange Commission (BSEC) to better educate small investors.
Turning to Sukuk bonds, the Adviser said the instrument has huge potential to ease pressure on banks if properly utilised.
“We have over Tk 24,000 crore taka worth of Sukuk but most are invested in sovereign projects. The private sector should also tap into this tool to finance infrastructure and business ventures,” he added.
He also highlighted the need for securitisation in mega infrastructure projects such as MRT (Mass Rapid Transit) systems, which require billions of dollars in investment.
Instead of depending only on foreign loans or government borrowing, SPVs and securitisation could have attracted investors with steady flows of income, said the adviser .
Citing the example of Beximco’s Sukuk, he cautioned that project selection and asset backing are critical to maintain investor confidence. “The issuance must be carefully scrutinised to ensure profitability and transparency.”
The Adviser further pointed out challenges in mobilising gratuity and pension funds for investment due to legal restrictions and the government’s fiduciary responsibility.
Finance adviser inaugurates fellow adviser's book on Bangladesh's political economy
“These are public funds. If we expose them recklessly to the market and lose money, the state will have to bear the liability. That cannot be allowed,” he said.
He also touched upon weaknesses in the insurance sector, calling it “a mess” that requires urgent reforms.
“A vibrant financial sector must go beyond banks and include strong capital, insurance, and special tax instruments,” he added.
The Adviser stressed the importance of building trust between taxpayers and the government.
“People must feel they are receiving services in return for the taxes they pay. That is the ultimate test of governance,” he said.
Special Assistant to the Chief Adviser and Chairman of the Capital Market Development Committee Dr. Anisuzzaman Chowdhury, Bangladesh Bank Governor Dr. Ahsan H. Mansur, , Banglade, Financial Institutions Division Secretary Nazma Mobarek also spoke at the programme.
Prof. M Kabir Hassan of University of New Orleans, USA presented the keynote paper while Chairman of the Bangladesh Securities and Exchange Commission Khondoker Rashed Maqsood chaired the event which was hosted by Chairman of the Dhaka Stock Exchange Mominul Islam.