Strengthening banking sector

Governance and transparency are of utmost importance in ensuring the trustworthiness of Bangladesh's banking sector. Central to this is the necessity for self-governing and effective board oversight, which hinges on the configuration of boards with experienced and independent directors committed to shareholder and stakeholder interests.
Moreover, vigorous risk management practices are indispensable to recognise, evaluate, and lessen numerous risks, such as credit, market, operational, and compliance risks. Transparency and disclosure play a fundamental role in building trust among stakeholders. Banks ought to provide clear and inclusive information on their financial performance, risk exposures, corporate governance practices and regulatory compliance.
Adherence to regulatory requirements is non-negotiable, with banks expected to comply with laws and regulations framed by the Bangladesh Bank and other regulatory authorities. Maintenance of ethical standards and fostering a culture of integrity within banks is imperative to avert misuse of fund.
Strengthening of internal controls and audit processes is essential to plug fraud and errors, thereby preserving the interests of depositors and investors. Addressing governance and transparency challenges requires concerted efforts from banks, regulators, policymakers, and other stakeholders to promote accountability, integrity, and sustainable growth of Bangladesh's banking sector.
Weak governance practices, such as a lack of accountability, inadequate risk management and ineffective internal controls, have remained the key concerns in the banking sector. Instances of corruption, mismanagement, and fraudulent activities have eroded public trust in the banking system and have had adverse effects on financial stability. Furthermore, poor governance can undermine the efficiency of regulatory oversight putting banks at financial risks.
To address these governance challenges, The BB and regulatory authorities have been stressing the need for implementing stronger corporate governance standards and risk management practices within banks. This includes augmenting board oversight, strengthening internal controls, and promoting transparency and disclosure of financial information. Moreover, there have been calls for greater regulatory enforcement and supervision to ensure compliance with governance standards and to hold banks and their management accountable for delinquency and breaches of regulations.
Improving governance and transparency in the banking sector is indispensable for maintaining trust and confidence among depositors, investors, and other stakeholders, as well as for promoting financial stability and sustainable economic growth in Bangladesh.

Nargis Sultana
Assistant Professor
Department of Finance & Banking
Comilla University, Cumilla, Bangladesh
[email protected]