Banking sector will once again become haven for corruption, looting: TIB

Transparency International Bangladesh (TIB) has warned that the banking sector will once again become a haven for corruption and looting.

In a statement issued on Monday, TIB Executive Director Iftekharuzzaman said that the government has taken steps to rehabilitate identified looters. This has been done by adding a provision in the Bank Resolution Act 2026 that allows old shareholders of merged weak banks to return to ownership without any accountability.

He explained that under the Bank Resolution Ordinance issued during the interim government, even if the person or group responsible for a bank’s collapse returned all the money, they had no opportunity to regain ownership. However, that position has now been changed by adding Section 18(a) in the new Bank Resolution Act.

“No matter what the government’s reasoning may be, this decision amounts to aiding and protecting corruption and looting,” he said. “Instead of ensuring accountability through due legal process, the looters in the banking sector have been rewarded in a big way. This is suicidal.”

Iftekharuzzaman added that the government’s decision was disappointing but not surprising. He noted that the fall of authoritarianism does not mean the end of abuse of power and extortion in the banking sector. Rather, it has opened a smooth path for the rehabilitation of those involved after a temporary break, through the rotation of policy capture in a “winner takes all” formula. This step by the government is an example of that trend and is a continuation of the highly controversial decision to appoint the governor of Bangladesh Bank.

TIB stated that as a result of this change in the new law, the old shareholders of weak or merged banks will now have the opportunity to return to ownership. Previously, that path had been blocked under the ordinance.

The organisation claimed that instead of bringing those responsible for the long-standing mismanagement, irregularities and lack of good governance in the banking sector to justice, this law has created a path for their rehabilitation.

Raising this question, Iftekharuzzaman said, “The previous owners of the banks in crisis, who are the pioneers of looting in this sector, have they achieved such purity by some magic power that they will deposit only 7.5 percent of the amount determined by the government for the repossession of the shares, assets and so on of the same bank, and repay the remaining 92.5 percent with only 10 percent interest in two years?”

He continued, “They must provide new capital, fill the existing capital deficit, repay the liabilities of all previous depositors and creditors, pay the government’s taxes and revenues, provide compensation to the affected parties, and restructure the compliance framework of the relevant rules and regulations. Does the government have an answer to this question?”

Iftekharuzzaman also asked on what criteria the exchange value for repossession would be determined. He said it was incomprehensible how the troubled Bangladesh Bank, given the clear conflict of interest, would ensure that the conditions announced after bank repossession would actually be followed in reality.

He expressed fear that by taking advantage of the ongoing culture of debt default in the name of fulfilling the announced conditions, a situation of even deeper bankruptcy might be created in the banking sector. The burden of this would ultimately have to be taken by the people.

In the statement, Iftekharuzzaman said that the government has passed the law in parliament with the power of its majority. It has added new provisions that support corruption in the name of keeping banks operational, protecting deposits and ensuring economic stability.

He questioned whether this would help fulfill the ruling party’s promise in their election manifesto to reform the banking and financial institutions sector. Or has such a suicidal decision been taken simply to protect the interests of opportunistic groups?

He requested the government to reconsider this matter.