Bangladesh’s banking sector began to deteriorate in 2010 when the government introduced a single-digit 9 percent interest rate for lending, according to a White Paper. Titled “White Paper on the State of the Bangladesh Economy”, the report was unveiled at a press conference on Monday. As of last June, the total assets of banks in the financial sector stood at Tk 25.46 lakh crore, representing 47 percent of the country's gross domestic product (GDP). Bank deposits amounted to Tk 18.41 lakh crore, or 34 percent of GDP. White Paper prepared through inclusive, consultative process: Debapriya Between 2001 and 2019, GDP growth doubled, underlining the critical importance of private sector lending. However, the banking sector, which had been gradually strengthening, began to spiral out of control primarily after 2010. The report attributes this decline to temporary and hasty policy changes by regulatory agencies and the government, which resulted in misguided lending practices. Significant policy shifts included fixing the market-based interest rate at 9 percent, introducing the smart rate system, providing collateral-free loans during the Covid-19 pandemic, and adopting the crawling peg system in the foreign exchange rate regime. In April 2020, following discussions with private bank entrepreneurs, the then Finance Minister AHM Mustafa Kamal announced the 9 percent interest rate cap on bank loans. At that time, interest rates in the banking sector had reached as high as 22 percent. Excess capacity payments to exceed Tk 36,000 cr in 15 years: White Paper After entering into a loan agreement with the International Monetary Fund (IMF) early last year amidst a financial crisis, Bangladesh Bank gradually began increasing interest rates. The White Paper reveals that the fixed rate was, in effect, market-based only on paper. It also highlights a turning point in governance, when the Awami League government was ousted during the student-led public uprising on August 5, paving the way for an interim administration. Following the change in government, the leadership of financial regulatory agencies was overhauled. The implementation of IMF conditions and the elimination of previous policies commenced. To address the poor state of the financial sector, the central bank has raised its policy rate by 525 basis points since May 2022. White Paper: Debapriya focuses on 2-year economic plan The current policy rate stands at 10 percent, which is expected to help control inflation. The average lending rate in the banking sector is now around 12 percent, with some cases reaching 14 percent. Despite the introduction of a single-digit interest rate, the report reveals that most loans issued after 2010 have turned into defaults. The ratio of defaulted loans currently stands at 12.5 percent, amounting to Tk 2.85 lakh crore.

The central bank of Bangladesh has been forced to issue a statement to clear the air, as it were, of the confusion arising out of its initiative to bring about consolidation in the country's ailing banking sector. As a necessary part of the process aimed at reducing the number of banks in the country, the sector is going to witness a number of mergers between previously disparate entities in the coming days. Top execs of merging bank cannot hold posts at acquiring entity: Bangladesh Bank Five merger proposals have already been received and  are expected to be approved by the end of 2024. They involve around 11 institutions, and if completed as proposed, would reduce the number of banks in Bangladesh by 6 - around 10% of the total. Yet the unprecedented nature of these moves in the banking sector, where there is no previous record of two Bangladeshi banks having merged, has led to a state of panic and confusion among members of the public, to the extent that people are reportedly withdrawing their deposits from certain banks, said sources at some respected banks. Bangladesh Bank auctions gold for the first time in 16 years They said most of the depositors are suffering from the dilemma of whether or not to keep money in the bank. Some are withdrawing their money from the banks due to 'fear'. Bangladesh Bank was forced to address the issue in its statement today, asserting that individual as well as institutional depositors' money will remain fully safe and secure in banks during the merger process. Noticing different news and social media posts, the central bank said accountholders of two merging banks will be able to maintain their respective accounts as before even after the completion of the merger. Bangladesh Bank issues detailed directive on appointment of MD, CEO for NBFIs The merger process will be completed based on the consent of the entrepreneurial directors, current boards, and common shareholders of the banks covered by the merger, said the statement.

The women employment in the banking sector increased by 1407 in July-December period of 2023, and the overall perrcentage of women employees at banks stood at 16.37 percent in Bangladesh. Meanwhile just 13.51% of board members in the banks are women.  Bangladesh Bank’s (BB’s) latest report on gender equality revealed this information. There are 33346 women employees in 61 banks in the country, which is 16.37 percent of the total employees of banks, according to the report. The BB report shows that among the scheduled banks in 2023, 43 private commercial banks have the highest number of women employees 22,248, which is 16.32 percent of the total employees. Foreign commercial banks have the highest proportion of female officers, 24.18 percent as compared to other banks. In the period July-December 2023, the participation of women as board members was only 13.51 percent. Among them, foreign commercial banks have the highest female board member participation rate at 17.54 percent. Read more: Bangladesh's women empowerment showcased in Myanmar On the other hand, there is no participation of women board members of specialized commercial banks in the discussed period. According to the reports submitted by banks during the period July-December 2023 shows that the participation rate of women employees is higher at the entry-level 17.04 percent and mid-level 15.79 percent than at the higher levels 9.36 percent. Analysis of the obtained data shows that the participation of women in the banking sector is high at the initial stage. At the same time, the participation rate of female employees under thirty years of age 20.99 percent is more than double that of female officers above 9.58 percent in scheduled banks. Bangladesh’s place has improved by 12 steps in the gender gap report of the World Economic Forum (WEF) in 2023, as women's employment increased in the country. The BB report shows that Bangladesh is holding the 59th position in 2023 improving from 71st in 2022 in the gender gap of WEF, among 146 countries in the world. Read more: PM Hasina keen to create more scopes for women in every sector: Nasrul Hamid Executive Director of CDP Dr. Fahmida Khatun said that women's employment is usually increasing with the developing socio-economic scenario of the country and decreasing the ratio of women's employment does not match that calculation. She focused on the need to study why the ratio of women employment has been decreasing in the banking sector. Bangladesh Bank’s spokesperson Mezbaul Haque told UNB that women's employment has increased in the banking sector following the central bank’s policy to reduce the gender gap in banks and financial institutions. The central bank prefers women both in employment and entrepreneurship development. Loan disbursement and interest incentives have been given to women encouraging them involved in financial inclusion. The BB is still working to ensure a sound environment in the workplace of banks. Facilities including maternity leave and daycare opportunities for women’s employees have increased, he said. Read more: Proven Passive Income Ideas for Women in 2024

Independent MP AK Azad on Monday (February 12, 2024) demanded a list of those who have laundered money abroad taking loans from banks be placed in Parliament. Azad, who was elected MP for the first time, came up with the demand while participating in the discussion on the thanksgiving motion on the President’s speech. He said that Prime Minister Sheikh Hasina is totally against corruption and Awami League's manifesto also cited that. “First of all, good governance will have to be established in the banking sector,” Azad said. Read more: Bangladesh Bank sets an 11-point roadmap to realise default loans Welcoming Bangladesh Bank's roadmap for reforming the banking sector, Azad, also President of Newspapers Owners Association of Bangladesh (NOAB), said the amount of defaulted loans in Bangladesh is around Tk 1,45,633 crore. “But in reality, the amount is much more. But through write off, the amount of debt is shown less. Those who have taken loans and invested in factories and failed to repay, may be exempted subject to investigation,” he said. He demanded to bring to justice those who did not invest loan money in any business, and instead laundered the money. “They made home at Begum Para, and second homes. Their list should be published in the parliament,” he demanded. Read more: Bank MDs working under increased stress due to default loans, board interference: Experts He also commented that Bangabandhu's dream will not be realised unless they are brought under the law. The independent MP said that those who looted banks are responsible for the rise in commodity prices and inflation. Azad said that he wants to be accountable to the countrymen and voters through this parliament. Azad also said he wants to make the parliament effective and lively through constructive criticism of the government. He expected cooperation of the Speaker in this regard. Read more: Businesses should get opportunities to turn around before wholesale declaration of loan defaulters: FBCCI President

Prime Minister Sheikh Hasina on Sunday instructed to inform her about the current situation of Bangladesh’s banking sector. She gave the instruction during the Secretaries’ Committee Meeting, Cabinet Secretary Khandker Anwarul Islam told UNB. Read more: Complete ongoing prioritised projects: PM directs secretaries Regarding the banking sector, the Cabinet Secretary said the issue was discussed indirectly at the meeting and instructions were given to the Banking and Finance Division. “There’s a lot of talk (over the banking sector), let us know what the real scenario is soon,” the Cabinet Secretary  quoted the PM as saying. Read more: After Bangladesh assisted Sri Lanka with $200mn, many countries made similar requests: PM About recent events concerning Islami Bank, he said some “outsiders” are talking about the state of some banks on YouTube. “Yet, this was not neglected in the meeting. This issue will be looked into as well.”

The capital markets will follow the banking sector's lead in operation during the pandemic of Covid-19. This was informed by the Bangladesh Securities and Exchange Commission (BSEC) against the backdrop of different rumors since news broke of the lockdown to be imposed by the government from Monday next. A notice posted on the official website of the BSEC said: "Capital market will continue operation at the interest of investors in any situation during the pandemic of Covid-19 if the banking activities continue." It said all transactions in the capital market will continue in the interest of investors. Also read: Govt to enforce 7-day lockdown from Monday: Quader It urged the investors to pay no heed to any sort of rumors. According to BSEC sources, if the bank is open in lockdown, the capital market will also be open. This instruction has been given to two stock exchanges (Dhaka and Chittagong). Also read: Covid-19: Bangladesh sees 5,638 cases, 58 more deaths They said, the commission has instructed DSE to keep the capital market open if banks are open. The capital market will operate utilising smaller shifts and work-from-home facilities. Earlier, from March 26 to May 31 last year, transactions in the capital market were closed due to the outbreak of coronavirus.

Humaira Azam is set to become the first female managing director of a private bank in Bangladesh when she assumes the role of Trust Bank Limited. She is currently serving as the Additional Managing Director (AMD) at the bank. Banking industry sources said the Trust Bank board of directors in a meeting on Monday selected Humaira for the post of MD and forwarded a proposal to the central bank in this regard. Read Nine public sector banks hold 27 percent assets, deposits in banking sector The appointment will be made after getting approval from the Bangladesh Bank. Humaira served as the first female MD in the IPDC Finance, a private financial institution.  The Dhaka University International Relations graduate started her banking career in 1990 as a trainee officer at ANZ Grindlays Bank.  In her long career, she served different foreign and local banks and financial institutions in various capacities. Read Banks can declare the highest 30% dividend. Humaira joined HSBC Bangladesh in 1996 and switched to Standard Chartered Bank in 2002. In April 2009, she took over as the MD of the financial institution IPDC where she turned the organization into a profitable one. She joined Bank Asia in January 2012 as the Chief Risk Management Officer. In March 2016, she took over as the Chief Risk Management Officer and Additional MD at the Trust Bank. Earlier, Prabasikalyan Bank got the first woman MD in the state-owned banking sector.  Read Legendary Women in Bangladesh with Pioneering Contribution in Diverse Fields.

Bangladesh Bank has restricted banks on declaring dividend before September 30 this year and also on declaring more than 30 percent dividend in order to reduce the liquidity pressure in banking sector against the backdrop of coronavirus fallout.

Finance Minister AHM Mustafa Kamal has advised the banking sector leaders to keep non-performing loans (NPLs) under control, saying the road ahead to recover the economy will be a challenging one.

Finance Minister AHM Mustafa Kamal on Thursday asked bank officials to fix their own problems before any tougher action starts coming from the higher level of the government.