Political parties must pledge specific banking reforms in election manifestos: CPD's Fahmida
NPL have surged to nearly the size of the national budget, CPD Executive Director Fahmida Khatun warned, calling for full autonomy of Bangladesh Bank and stronger political commitments to reforms to rescue the crisis-hit sector.
Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), has called on all political parties to include specific, time-bound commitments for banking sector reforms in their election manifestos to restore discipline in the country's financial heart.
Speaking at a discussion titled "Banking Sector Reforms: Challenges and Actions" organised by the Economic Reporters' Forum (ERF) in the capital today (18 December), the economist implied that since the sector's collapse was largely driven by political agendas, the remedy may also be rooted in a firm political mandate.
"It is crucial for political parties to include specific commitments on banking reforms in their manifestos for the upcoming election," she stated, adding that without such high-level political backing, institutional recovery would be nearly impossible.
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She further stressed that full autonomy of the Bangladesh Bank is non-negotiable if the sector is to move past the era of politically motivated lending.
State of near-collapse
Fahmida emphasised that the banking sector, once a powerhouse for creating local entrepreneurs, is now in a state of near-collapse. She attributed this decline to a toxic mix of policy weaknesses, direct political interference, and a systemic lack of rigorous screening during loan disbursements.
The crisis' scale was brought into focus when the economist revealed that the total volume of non-performing loans (NPLs) in the banking sector is now almost equivalent to the size of the national budget.
While NPL rates were artificially suppressed in the past through creative accounting, the adoption of proper reporting standards has led to what she described as an "abnormal" but more accurate rise in the figures.
"The rate of NPL was shown to be lower in the past, but now, following proper accounting procedures, the rate has risen abnormally," she said.
Despite that, the CPD chief noted that recent measures, such as the Bank Resolution Ordinance 2025 and other policy shifts by the Bangladesh Bank, are positive steps in the right direction. However, she warned that these reforms must be sustained and insulated from future political pressure.
