Investor assets held with the Central Depository Bangladesh Limited (CDBL) and depositors’ funds entrusted to commercial banks represent far more than entries on a balance sheet or digits on a screen.
They embody a profound legal, economic and moral contract between financial institutions and the public. In a functioning market economy, these assets must be treated as a sacred trust, preserved in safe custody with absolute honesty.
Financial institutions do not own this capital; they are legally bound to serve as vigilant gatekeepers, protecting public wealth from external shocks and internal misconduct.
This is not merely an ethical aspiration. It is the foundation of modern financial systems. Across the world’s leading legal traditions, the same custodial obligation is embedded in law.
How global jurisprudence treats custodianship
British financial jurisprudence anchors this obligation in the common law doctrine of fiduciary duty. Custodians owe beneficiaries undivided loyalty, and conflicts of interest, unauthorised pledging of client assets or regulatory negligence constitute serious breaches of trust. Institutions that place corporate survival above client protection face legal consequences.
In the United States, the Securities and Exchange Commission’s Customer Protection Rule (Rule 15c3-3) requires brokerages and financial intermediaries to segregate client securities and cash from their own operational capital. The purpose is straightforward: customer assets remain protected even if the institution fails.
The European Union follows the same philosophy through the Markets in Financial Instruments Directive II (MiFID II), which treats custodians as critical infrastructure safeguarding financial stability. The framework mandates rigorous oversight and transaction monitoring to shield investors from market abuse and systemic failures.
China elevates custodianship further. Under the People’s Republic of China’s Trust Law and Securities Law, enforced by the National Financial Regulatory Administration (NFRA), protecting public wealth is regarded as a pillar of national economic order and social stability. Breaches invite severe corporate and criminal penalties.
India, drawing from its common law heritage, has likewise built an uncompromising fiduciary regime through the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) under the Banking Regulation Act. Client asset segregation is non-negotiable.
Depository participants and commercial banks are treated as trustees of public wealth, and regulators have consistently sanctioned even limited co-mingling of client funds, recognising that investor confidence and market liquidity depend on institutional integrity.
Viewed through Anglo-American common law, European civil law or Asian regulatory systems, the conclusion is identical: financial institutions must honour their custodial responsibilities with uncompromising honesty. By acting as faithful gatekeepers, banks and central depositories preserve the trust and liquidity that allow modern economies to function.
Bangladesh’s governance gap
The contrast with Bangladesh is difficult to ignore.
Despite well-established international standards, regulatory interventions by Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC) have yet to deliver meaningful improvements.
This assessment is grounded not in perception but in publicly available financial reports, independent think-tank analyses and extensive media investigations into non-performing loans (NPLs).
Those disclosures reveal an alarming deterioration. The number of classified loan accounts more than doubled within a year, reaching 45.83 lakh.
At the same time, non-performing loans have remained above 32 per cent of outstanding bank credit. Financial analysts and business leaders argue that a significant share of these defaults is wilful, sustained by weak legal enforcement and prolonged court procedures that allow influential borrowers to delay recovery.
The figures expose more than deteriorating asset quality. They reveal failures in institutional gatekeeping.
If classified loan accounts can double within a year, existing disciplinary measures, regulatory circulars and repeated rescheduling policies have clearly failed to deter those exploiting public wealth.
Weak credit assessment, inconsistent enforcement and governance failures have combined with a persistent culture of impunity to undermine the very institutions entrusted with protecting public assets.
Trust is economic infrastructure
When trust weakens, capital slows.
Investors retreat from capital markets. Depositors become reluctant to place their savings with banks. Liquidity tightens, investment weakens and financial intermediation loses efficiency.
No country can sustain long-term economic growth on a fractured financial foundation.
Institutions such as CDBL and commercial banks must return to the first principles of fiduciary responsibility. Public funds are not institutional assets to be exposed to excessive risk or insider abuse. They are wealth held in trust and must be protected with uncompromising honesty.
The conclusion is neither abstract nor theoretical. History has settled the question. Financial systems that fail to safeguard investor assets, depositor savings and market liquidity ultimately undermine confidence itself.
Without restoring that confidence through stronger governance and faithful custodianship, Bangladesh’s GDP growth ambitions will remain far more difficult to achieve.
Write is a former chairman and former president of Dhaka Stock Exchange PLC.
Views expressed are solely those of the author.
