Bangladesh Bank on Wednesday formed a six-member task force aimed at reforming the troubled banking sector.
According to a Bangladesh Bank press statement, the task force comprises Lutfey Siddiqi, special envoy on international affairs to the chief adviser; Muhammad A (Rumi) Ali, former deputy governor of Bangladesh Bank; Meheriar M Hasan, chairman of BRAC Bank PLC; Zahid Hussain, former chief economist at the World Bank Group鈥檚 Dhaka Office; Dr M Zubaidur Rahman, vice-chancellor of ZNRF University of Management Sciences; and Sabbir Ahmed, Hoda Vasi Chowdhury & Co Chartered Accountants.
The task force鈥檚 primary responsibilities include assessing the current financial state of the banking sector, identifying non-performing assets and major risks, reviewing the financial indicators of weak banks, determining provisioning shortfalls, analysing liquidity conditions, calculating net capital, and evaluating the real value of assets.
They will also focus on isolating bad assets from the affected banks.
In addition, the task force will propose measures to strengthen governance and risk management in banks, improving their ability to withstand financial crises, the press statement said.
This will involve refining the regulatory framework, reducing political and corporate influence on banking decisions, and reforming bank ownership structures, it said.
The group will also prepare a recovery and resolution framework for troubled banks and draft necessary guidelines.
The task force will review key financial laws, such as the Bank Company Act and the Bangladesh Bank Order, and recommend necessary reforms.
They will also propose updates to laws related to asset management companies, bank mergers, and acquisitions, with the goal of publishing a comprehensive white paper on the banking sector, according to the press statement.
The government formed this task force in response to the banking sector鈥檚 severe challenges, including rising default loans, money laundering, lenient rules for defaulters, and widespread collusion among the government, regulatory bodies, and businesses.
S Alam Group, reportedly backed by the Awami League-led government, allegedly withdrew around Tk 2 lakh crore from the banking sector, with nearly half of that sum coming from Islami Bank Bangladesh. The group controlled eight banks in the country.
As the banking sector plays a critical role in financing the country鈥檚 economy and is currently in crisis, immediate reforms are deemed critical.