A significant structural reform initiative is underway in Bangladesh’s financial sector aimed at strengthening discipline, transparency and accountability across the banking system. Policy-level discussions are reportedly in their final stages to restructure the boards of directors of 22 commercial banks, both state-owned and private. If implemented, the move would bring substantial changes to the governance of nearly one-third of the country’s banking institutions.
The reform drive gained momentum following recent political developments, which triggered renewed efforts to stabilise and reorganise the financial sector. After the political transition on 5 August 2024, the interim administration prioritised restoring order within the banking system. Under the leadership of the central bank governor, Dr Ahsan H. Mansur, several banks have already seen their boards dissolved and reconstituted, while discussions on potential mergers of weaker institutions have also advanced.
Although earlier proposals included the consolidation of a number of Islamic banking institutions, disagreements among stakeholders slowed progress. Questions were also raised regarding the inclusion of individuals with alleged links to past irregularities or conflicts of interest in newly formed boards, prompting policymakers to reassess the overall restructuring strategy.
At present, the Ministry of Finance and the central bank are jointly conducting an in-depth review of the governance structures of the 22 identified banks. Depending on the findings, authorities are considering either partial reshuffling or complete dissolution and reformation of existing boards. Experts suggest that such a step could mark a turning point in addressing long-standing governance weaknesses in the sector.
Analysts emphasise that banking is one of the most sensitive pillars of any economy. Poor board composition often leads to weak risk management, rising non-performing loans, and reduced financial stability. They argue that board appointments should prioritise professional competence, banking expertise and adherence to international governance standards rather than political affiliation.
Bangladesh currently has 61 scheduled banks operating in the financial system. A restructuring effort involving 22 of these institutions would therefore have a far-reaching impact on management practices, lending policies and risk oversight mechanisms across the sector.
Overview of Proposed Banking Sector Reform
| Aspect | Current Situation | Proposed Change |
|---|---|---|
| Total scheduled banks | 61 institutions | 22 banks under review |
| Board structure | Existing boards in operation | Restructuring or replacement under consideration |
| Primary objective | Ongoing partial reforms | Enhanced transparency and accountability |
| Supervising authorities | Ministry of Finance & Central Bank | Joint oversight and coordinated implementation |
| Key focus areas | Routine administration | Governance, risk management and leadership quality |
A spokesperson for the central bank, Arif Hossain Khan, stated that no final decision has yet been announced. However, discussions and preliminary assessments are actively ongoing, and visible progress is expected in the near future.
Overall, the proposed restructuring of 22 bank boards signals one of the most ambitious governance reforms in Bangladesh’s banking history. While the initiative is widely seen as a step towards restoring confidence and stability in the financial sector, its success will largely depend on impartial execution and effective implementation.