Much of the trouble in Bangladesh's financial sector lies in the fact that corporate entities having business dealings with banks and non-bank financial institutions (NBFIs) also own these.
Such an anatomy of the problems perennially troubling the country's financial-sector institutions -- including recurring mega-scams -- has been done by none other than the central bank governor.
"This is creating problems in many cases," Mr Fazle Kabir says about the unlikely coupling between corporates and banks and NBFIs from which they draw finances.
Speaking at a book-launching programme arranged on Thursday night by Bangladesh Institute of Bank Management (BIBM), he cited as an example of how India had been vexed by this problem and resolved it through enacting a law.
"There was once such a practice in India. They later enacted legislation to stop corporate from owning banks and NBFIs," he told the function, stressing such decoupling of corporate businesses from banks and non-banks.
BIBM faculties penned the book on the development of Bangladesh banking sector after independence, narrating chronological progress of the sector in last 50 years.
The BB governor, Fazle Kabir, noted that in the last 50 years, the country's banking sector had come a long way in terms of getting equipped with technology.
"We have made unprecedented advances, especially in mobile and internet banking," he says, adding that research should be done on where banking sector will go in the next 50 years from now on.
He appreciates that banks have played a key role in trade facilitating and implementing government incentive packages in the past.
The central bank governor mentions that the state-owned banks do not charge commissions for opening LCs for various government projects.
"If they had taken commissions, it seems that the banks would not have run out of capital."
Of course, the chief banker hastens to add, there is no chance to see it as an excuse for a defaulted loan, though the volume is decreasing now.
There's no such thing as freedom of organization, he says. "The key issue is whether it is being conducted professionally without any interference."
Speaking at the event, Executive Director of Institute for Inclusive Finance and Development (InM) Dr Mustafa K. Mujeri said, "We have to admit that the banking sector has not developed efficiently here."
There are irregularities, mismanagement and government interference in the banking sector."
Mr Mujeri notes that the central bank has its limitations in formulating an independent monetary policy. "The more the banks and the economy are opened up, the more it will develop," he says.
Former senior secretary Mahbub Ahmed said in the last five decades, there had been a great change and evolution in the supervision, control and reform of the banking sector under the guidance of the central bank.
He mentions that the central bank has also made significant changes in the use of information technology in the supervision system.
"Financial-sector reform is continuing to adapt to the ever-changing environment of the outside world and makes the activities of financial institutions stronger and more dynamic," he says.
Managing Director and CEO at Dutch Bangla Bank Limited Abul Kashem Md. Shirin told the meet that the banking sector would be further developed if it was possible to stop the interference of the board in the management activities.
He notes that with the development of banks in the private sector in the nineties, the crime rate in this sector has increased.
"On the other hand, various laws and regulations have been enacted to prevent these crimes."
Mr Shirin reminds that it is banks' responsibility to protect depositors' interests.
"The interests of the depositors are getting violated due to both management and board of the banks," he told the meet.
Managing director and chief executive officer (CEO) of Brac Bank Limited and chairman of the Association of Bankers Bangladesh Limited (ABB) Selim RF Hussain said banks' engagement with people had increased in last few decades.
He admits there are challenges and problems but says the country could not have progressed this much without contribution of banks.
Former managing director of Mutual Trust Bank Anis A Khan feels that the story of radical change in the banking sector should be told more.
He says the time has come to implement the concept of Board of Directors and Board of Supervisors in the banking sector.
"If this is implemented, many problems in this sector will be solved," he adds.
Professor (Selection grade) and lead author of the book Shah Md Ahsan Habib spoke on behalf of the authors at the function, presided over by BIBM DG Dr Md. Akhtaruzzaman.
