Ensuring Good Governance in the Banking Sector: The Way Forward

To promote an enabling environment for establishing good governance, Transparency International Bangladesh (TIB) conducts various types of policy advocacy activities, including research, on important public and private sectors, institutions, and issues. As part of this initiative, TIB conducted a research study in 2020 to identify the challenges of good governance and their underlying causes in the role of the central bank regarding supervision of the banking sector and the control of non-performing loans. Subsequently, TIB has carried out policy advocacy activities with relevant ministries and institutions on issues such as establishing good governance in the banking sector, preventing money laundering, and ensuring discipline in the financial sector.

In light of the newly formed government’s commitments in the election manifesto for the 12th National Parliamentary Election—such as strict enforcement of laws to recover defaulted loans, taking action against money launderers, bringing loan and tax defaulters as well as those who have illegally acquired assets under justice, and confiscating assets—recent steps have been taken, including the announcement of a roadmap by Bangladesh Bank to reduce irregularities and corruption in the banking sector, as well as initiatives to reform the director appointment policy of private commercial banks. However, to establish good governance in the banking sector and ensure a sound and secure banking system, further reforms and effective implementation of laws, policies, and institutional structures related to the banking sector are necessary. In this regard, based on TIB’s research findings and the current context, this policy brief is presented along with recommendations to support the establishment of good governance and a sound and secure banking system in the banking sector.

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