Nations emerging from prolonged misrule often find that their financial system has been hollowed out far more deeply than meets the eye, eroded by years of politically motivated lending, normalisation of misconduct and weak regulation. Bangladesh today faces precisely such a reckoning, with non-performing loans reaching an astonishing Tk 6445.15 billion equivalent to nearly 36 per cent of total banking credit and the highest default ratio in over two decades. Against this backdrop, the proposal by special envoy Lutfey Siddiqi to establish a Truth and Reconciliation Commission dedicated to economic crimes warrants serious consideration. While still at the conceptual stage, such a mechanism could go beyond routine regulatory enforcement to recover a portion of non-performing loans and lost public money and prevent their recurrence.
Indeed, the scale of financial plunder that has hit Bangladesh's banking sector is unlike anything the country has seen before. State-owned banks, private banks and even Islami Shariah-based lenders all became channels for large-scale theft. Borrowers with political connections took out loans worth billions of taka with no intention of repayment, treating public money as their own. Forged property documents, inflated project costs and fictitious import-export deals served as routine collateral, while regulatory approvals arrived with suspicious speed. The worst cases saw the capture of several banks' governing boards to help approve fake loans and the subsequent laundering of funds through trade misinvoicing. By the time the previous autocratic government fell, 10 banks accounted for more than 70 per cent of total non-performing loans of the country, with their balance sheets almost ruined beyond repair. The central bank, stripped of true autonomy for years, had no choice but to merge five of them into one, a desperate move aimed more at stopping panic among depositors than at true recovery. Given the level of damage, it makes sense for the government to seriously consider extraordinary measures like a truth and reconciliation commission to maximise the chances of recovering defaulted loans and stolen funds.
There is, in fact, precedence for such a mechanism in Bangladesh. During the tenure of Caretaker Government in 2008, a Truth and Accountability Commission was established with the power to grant immunity in exchange for confession and voluntary surrender of illicit wealth. In its brief existence, hundreds of individuals came forward and deposited Tk 340 million into the state treasury before the High Court declared the commission unconstitutional. A carefully designed Truth and Reconciliation Commission today could build on that experience, offering wrongdoers a structured path to admit their crimes, return stolen assets and receive limited immunity. The commission could also be vested with strong investigative powers to document exactly how the plunder of banks occurred, who enabled it and which regulatory gaps must be permanently closed.
While a commission could theoretically aid in recovering some non-performing loans, time is the one resource this interim government lacks to initiate and operationalise it. With national elections and a constitutional reform referendum scheduled for 12 February, fewer than 60 days remain in its tenure. Establishing a credible, legally robust commission cannot be meaningfully accomplished in such a compressed window, however sincere the intent. Moreover, any arrangement that appears to let major defaulters escape accountability after a simple confession and partial repayment risks being seen as amnesty in disguise, further eroding public trust. That said, the core idea remains powerfully relevant. Truth, transparently established and followed by proportionate restitution and reform, can restore confidence and attract far more investment than any short-term fiscal patch. The incoming elected government, enjoying a full five-year term and a popular mandate, will be far better placed to champion such a commission as part of comprehensive efforts to recover the banking sector and revive the economy.
