Bangladesh is set to say goodbye to perhaps the most challenging year for the financial sector that endured multipronged strains like soaring inflation, liquidity dearth, panic cash withdrawal, exchange-rate volatility and NPL buildup, apart from political upheavals.
Leveraged and insider lending as well as control of some banks' ownerships by some now-embattled 'oligarchs' imperiled those. Current investigations find much of the bank money siphoned off the country.
Such unexpected developments severely dampen confidence of the depositors in some conventional and unconventional banks, leading to panic deposit withdrawal which puts the commercial lenders in serious troubles to even continue regular banking operations.
As the situation worsened, the central bank broke a pause of few months in injecting inflation-fuelling high-powered money and resumed providing direct cash supports, amounting to over Tk 250 billion, to the liquidity crisis-ridden banks for meeting the depositors' funding needs.
A precarious state in some of the banks came into the spotlight after the recent mass uprising that toppled Prime Minister Sheikh Hasina's regime on August 05, 2024.
Following the changeover in state power, the then central bank governor, Abdur Rouf Talukder, stepped down in fear of retribution for his role. He was replaced by Dr Ahsan H. Mansur.
After charge makeover in Bangladesh Bank (BB), the country's central bank dissolved boards of some 11 struggling commercial banks before their recast.
Witnessing such troublesome situation in the banking industry, the interim government, as part of its reform recipes, formed three taskforces to revive the sector through establishing corporate governance in banks and the regulatory body.
Frequent rise in policy rate was another feature of the outgoing year 2024 to contain higher inflationary pressure, hurting consumers through spiraling prices of commodities. In the process, the policy rate has gone up by 225 basis points to 10 per cent now, which becomes a matter of concern to the private-sector players in
their turn.
Growing non-performing loan or NPL in the banking sector was one of the sore points that often hit media headlines throughout the year. In the first three quarters of the calendar year, the volume of bad loans ballooned by Tk 1.39 trillion to Tk 2.85 trillion from Tk 1.46 trillion recorded by end of 2023.
In the later part of the outgoing year, the foreign-exchange (forex) market became extremely volatile as the exchange rate against a US dollar overshot Tk 127, much higher than the upper ceiling at Tk 120 of IMF-prescribed crawling-peg system.
The overreaching of mark forced the banking regulator to intervene strictly against the wrongdoers that helped reduce the rate a bit.
Some positive developments happened too this outgoing year, with the uncapping of the lending rate from May last when the BB was prodded by the IMF to reintroduce market-based interest rates after more than four years of controls.
© 2025 - All Rights with The Financial Express
