TDS Desk:

The Bangladesh Bank has formed a taskforce consisting of six members – lead by Chief Advisor’s Special Envoy Dr Lutfey Siddiqi – to reform the banking sector. The overall functions of the taskforce will be coordinated by the Bangladesh Bank governor.

The central bank issued a press release in this regard on Wednesday.

The other members are – Bangladesh Bank’s former deputy governor Muhammad A Rumee Ali, BRAC Bank Chairman Meheriar Hasan, World Bank Dhaka Office former lead economist Dr Zahid Hussain, ZNRF University of Management Sciences (ZUMS) Vice Chancellor Prof Dr M Zubaidur Rahman and, Hoda Vasi Chowdhury & Co Chartered Accountants Partner Sabbir Ahmed FCA.

The release added that the task force will mainly examine the current financial situation of the banking sector, conduct assessment on distressed assets and major risks, financial indicators of weak banks, actual credit status, provision shortfall, liquidity situation, net capital, actual value of assets, and separation of bad assets of the troubled banks.

It will provide recommendations regarding the development of regulatory framework, limitation of political and corporate influence in bank decision-making, and bank ownership reform, under the process of strengthening bank governance and risk management to achieve crisis resilience.

Preparation of recovery and resolution framework and related guidelines for problem banks, various policy measures/steps to be adopted for weak banks.

The task force will propose reforms in various laws related to the financial sector such as the Bank Company Act, Bangladesh Bank Order, asset management companies, bank acquisitions, mergers legislation, reforms and modernisation, while taking steps to issue a banking sector white paper.

During the Hasina regime, banking irregularities and corruption were the most discussed issues in Bangladesh. Non-performing loans jumped Tk 2.11 lakh crore at the end of June this year. During that regime, such loans increased by around 9.5 times.

The Hasina regime fell after deadly protests by the students’ movement on August 5. After the Yunus government assumed power, the new government took responsibility for reforming the financial sector.

As part of that, the new Bangladesh Bank governor made a committee to prepare a white paper about the overall economy, and now a task force has been formed for the banking sector.