Published: 08:27 PM, 11 June 2026
Poor Surveillance Corrupts Banking System in Bangladesh
The banking sector plays a crucial role in the economic development of any country. It serves as the backbone of financial activities by mobilizing savings, facilitating investments, and supporting trade and commerce. In Bangladesh, the banking industry has expanded significantly over the last few decades, contributing greatly to economic growth. However, despite this progress, the sector continues to face serious challenges due to poor surveillance and weak regulatory oversight. Inadequate monitoring of banking activities has led to financial irregularities, loan defaults, corruption, and a decline in public confidence.
One of the major problems in Bangladesh's banking system is the high volume of non-performing loans (NPLs). Many borrowers fail to repay their loans on time, causing significant losses for banks. Poor surveillance by regulatory authorities often allows influential borrowers to obtain large loans without proper assessment of their repayment capacity. In some cases, loans are approved based on political influence rather than financial merit. As a result, banks suffer from liquidity shortages and reduced profitability, which ultimately affects the overall economy.
Another significant issue is the occurrence of financial scams and fraud in the banking sector. Several major banking scandals in Bangladesh have exposed weaknesses in internal control systems and regulatory supervision. Fraudulent transactions, embezzlement of funds, and manipulation of financial records have caused billions of taka in losses. These incidents reveal that existing monitoring mechanisms are often insufficient to detect irregularities at an early stage. Stronger surveillance systems could help identify suspicious activities before they become large-scale financial disasters.
Corporate governance is another area where poor surveillance has created problems. Many banks suffer from weak management practices and conflicts of interest among board members. In some instances, directors and senior executives misuse their positions for personal gain. Regulatory bodies are responsible for ensuring that banks follow proper governance standards, but ineffective oversight often allows misconduct to continue unchecked. Strengthening governance structures and enforcing accountability are essential for improving the health of the banking sector.
The role of the central bank is critical in maintaining financial stability. In Bangladesh, the central bank is responsible for supervising commercial banks, enforcing regulations, and ensuring compliance with banking laws. However, critics argue that regulatory enforcement is sometimes inconsistent. While regulations exist on paper, their implementation is not always effective. Political pressure, administrative weaknesses, and resource constraints can limit the ability of regulators to take timely action against violations. As a result, problematic practices may persist for years before corrective measures are taken.
Poor surveillance also affects public trust in the banking system. Depositors expect banks to safeguard their money and operate transparently. When news of loan scams, fraud, or financial mismanagement emerges, people become concerned about the safety of their savings. A loss of confidence can reduce deposits and weaken the stability of financial institutions. Trust is one of the most valuable assets in the banking industry, and maintaining it requires effective monitoring and strict enforcement of regulations.
Technological advancements have created new opportunities for improving banking surveillance. Modern data analytics, artificial intelligence, and digital monitoring systems can help regulators detect unusual transactions and assess risks more efficiently. However, many banks in Bangladesh still rely on outdated systems and procedures. Investing in advanced technology could significantly strengthen oversight and reduce opportunities for fraud and corruption. Furthermore, regular audits and real-time reporting mechanisms would improve transparency and accountability.
To address these challenges, several reforms are necessary. First, regulatory authorities should strengthen their monitoring capacity by recruiting skilled professionals and providing adequate training. Second, banking laws should be enforced more strictly, regardless of the social or political status of the offenders. Third, transparency should be increased through regular disclosure of financial information and independent audits. Fourth, banks should adopt modern technological tools to improve risk management and surveillance. Finally, stronger cooperation between regulatory agencies, financial institutions, and law enforcement bodies is essential for preventing financial crimes.
In conclusion, poor surveillance remains one of the most significant weaknesses of the banking system in Bangladesh. It contributes to loan defaults, financial fraud, weak corporate governance, and declining public confidence. Although the country has made considerable progress in expanding its banking sector, sustainable growth requires stronger oversight and effective regulation. By improving surveillance mechanisms, enforcing accountability, and embracing modern technology, Bangladesh can build a more stable, transparent, and trustworthy banking system that supports long-term economic development.
Moreover, the challenges of poor surveillance are not limited to financial losses alone; they also have broader economic consequences. When banks are burdened with excessive bad loans and governance failures, their ability to provide loans to productive sectors declines. Small and medium-sized enterprises (SMEs), which are vital for employment generation and economic growth, often face difficulties in obtaining financing. Investors may also become hesitant to invest in a financial system perceived as weak or unstable. Additionally, repeated banking irregularities can negatively affect the country's international reputation and reduce confidence among foreign investors and development partners. Effective surveillance is therefore not only a matter of protecting individual banks but also of safeguarding the overall economy. A transparent and well-regulated banking system can attract investment, encourage savings, and promote sustainable development. Strengthening supervision today will help ensure greater financial stability and economic prosperity for Bangladesh in the future.
Nasir Uddin Shah is Chief Reporter
at The Asian Age.
