BB governor says Bangladesh needs fewer, stronger banks to ease oversight, cut costs

He says the remaining state-owned banks could be merged into two larger entities

Bangladesh’s economy can function adequately with just 10 to 15 banks, central bank Governor Ahsan H Mansur has said.

On Wednesday, he said the remaining state-owned banks could be merged into two larger entities.

“A proposal has already been submitted to the government,” he said at a lecture titled “Banking Sector: Current Situation and Future Challenges” at Jagannath University.

Comparing with India, where only four state-owned banks operate, Ahsan asked, “Do we need so many banks? We need large, strong banks. This would reduce overhead costs and management expenses. Supervising 61 banks places enormous pressure on Bangladesh Bank.”

He attributed the current fragility of the banking sector to governance failures at every level -- administrative and political.

Loans and bank acquisitions were often politically directed, he said, while multiple banks were controlled by single families, siphoning off billions without proper checks.

Warning against future crises, the governor added: “Unless Bangladesh Bank is granted autonomy, similar misappropriations could recur.

“Policies are no longer altered at whim. To maintain this continuity, we have proposed amendments to the Bangladesh Bank Order. Without it, the sector’s future is uncertain.”

Mahbub Ullah, convenor of the Economic Association, said government signals enabled the removal of massive funds from bank vaults, emphasising that a full disclosure of those responsible is needed to understand how state power created a new wealthy class.