Govt Plans to Keep Two State Banks, Merge Remaining Ones

Bangladesh Bank Governor Ahsan H Mansur

The interim government plans to retain only two of the country’s nine state-owned banks and merge the remaining institutions as part of efforts to improve governance and address long-standing mismanagement in the banking sector, Bangladesh Bank Governor Ahsan H Mansur said on Tuesday.

Speaking at a discussion at Jagannath University on January 21, Mansur said Bangladesh currently has 61 banks—far more than required—and suggested that the economy could function efficiently with just 10 to 15 banks.

“Reducing the number of banks will make it easier to ensure good governance,” he said, adding that the government intends to consolidate state-owned banks into two entities while merging others.

Bangladesh currently has nine state-owned banks, including six commercial banks—Agrani, Rupali, Sonali, Janata, BASIC and Bangladesh Development Bank—and three specialised banks: Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and Probashi Kollyan Bank.

Mansur said years of mismanagement, irregularities, nepotism and weak governance have severely weakened the banking sector, leading to losses of nearly Tk3 lakh crore. A significant portion of the money may have been laundered abroad, he added.

He alleged that around $20–25 billion may have been siphoned off through nepotistic channels, speaking at the event titled Banking Sector: Current Challenges and Future Prospects.

The central bank governor stressed that personal or political interests must not influence banking decisions, warning that poor governance has pushed the sector close to collapse. He said urgent reforms are needed across all areas of the banking system.

On non-performing loans (NPLs), Mansur expressed optimism that the ratio would decline to 25 per cent by March, but cautioned that political interference could resurface if the amended Bangladesh Bank Ordinance is not implemented.

He also said Bangladesh Bank is establishing a bank resolution fund, expected to raise Tk30,000–40,000 crore, to support both banks and non-bank financial institutions.

Highlighting the importance of moving towards a cashless economy, Mansur said cash-based transactions remain a major source of tax leakage. “Cashless payments could generate an additional Tk1.5–2 lakh crore annually,” he said, urging efforts to bring every student under the formal banking system.