Bangladesh cannot stabilise its economy without resolving the banking sector crisis, former caretaker government adviser Hossain Zillur Rahman said Saturday, warning that financial stress has become a binding constraint on growth.
He was speaking at a seminar titled “Disaster in the Country’s Banking Sector; Context of Islamic Banking Sector: Impact on National Economy and Way Forward”, organised by the Bank Customer Forum at the CIRDAP auditorium in Dhaka.
Hossain Zillur Rahman said political will is central to any turnaround, questioning legal provisions that, he said, enable individuals linked to financial sector distress to re-enter the system. He pointed to what he described as six structural stresses, including weakened policymaking, depositor distress, stalled investment and rising unemployment.
He said many depositors are unable to access their funds, calling it a systemic risk that demands urgent action. He also stressed greater autonomy for Bangladesh Bank to restore credibility in oversight.
Former Trust Bank managing director Faruq Mainuddin said banking reform requires firm political commitment and proposed separating losses linked to what he described as institutional looting before rebuilding balance sheets.
Citizens for Good Governance Secretary Badiul Alam Majumdar said banking dysfunction is already spilling into the wider economy, citing deposit withdrawal pressure and calling for repeal of contested provisions in the Bank Resolution Act.
He also called for stricter action against financial wrongdoing and faster restructuring of banks to restore confidence.
Several Islamic banking customers alleged that Islamic Bank Bangladesh PLC and Social Islami Bank PLC were taken over through politically facilitated processes and questioned regulatory oversight during the transitions.
Speakers warned that further instability in Islamic banking could inflict irreversible damage on depositor confidence and financial system stability.
