Government to Establish Financial Sector Reform Commission to Address Widespread Irregularities
Dhaka, August 31, 2025 — In response to recent revelations of massive loan fraud and persistent irregularities across Bangladesh’s financial sector, the government has announced plans to form a comprehensive Financial Sector Reform Commission. This new body aims to overhaul the banking, capital markets, insurance, and non-banking financial institutions to restore transparency, accountability, and stability.
The decision follows the uncovering of a significant loan scam at the state-owned Sonali Bank, which exposed weaknesses in oversight and governance. Officials have expressed growing concern over manipulation in the share market, irregular practices in insurance, and the lack of transparency among non-banking financial institutions, prompting policymakers to take broad and decisive corrective action.
According to senior officials at the Ministry of Finance, the proposed Commission will be the first of its kind to cover the entire financial sector comprehensively. While previous reform efforts primarily targeted the banking sector—with commissions formed in 1982, 1986, and 1996—this new initiative reflects the complexity and interconnectivity of the modern financial environment.
Earlier bank reform commissions paved the way for privatization initiatives and structural improvements. The 1982 reforms saw the operation of local private banks for the first time and partial denationalization of nationalized commercial banks. Subsequent commissions aimed to diagnose sector challenges and promote financial recovery. However, persistent vulnerabilities and evolving challenges necessitate a fresh and inclusive approach.
Finance Minister AMA Muhith has issued a directive to the Finance Division for the prompt establishment of the Commission. The directive highlights the dual trajectory of progress and corruption within the country’s financial institutions, emphasizing the critical importance of depth and soundness in the sector for sustained economic growth.
The Ministry of Finance is collaborating with Bangladesh Bank to finalize the Commission’s terms of reference and to identify priority areas. While the leadership of the Commission has yet to be determined, top economists and central bank representatives are expected to play influential roles.
Officials underline that political commitment will be crucial to ensure the reform process can address entrenched issues and sensitive matters effectively. They stressed that the Commission’s comprehensive recommendations will provide a blueprint to create a disciplined, transparent, and resilient financial system capable of supporting Bangladesh’s development objectives.
Additional concerns have been raised regarding governance shortcomings in other state-owned banks including BASIC and Rupali Bank, which have also struggled with loan sanction irregularities. The formation of the Financial Sector Reform Commission marks a significant step in the government’s broader strategy to renew confidence in the country’s financial institutions and markets.
The Financial Sector Reform Commission is slated to review current regulations, supervisory mechanisms, and institutional frameworks, aiming to introduce reforms that will curb corruption, enhance operational efficiency, and promote sustainable growth.
This announcement comes as Bangladesh celebrates the 31st anniversary of publication for The Financial Express, reflecting ongoing engagement with issues critical to the nation’s economic wellbeing.
For continued updates on this developing story and other financial news in Bangladesh, visit The Financial Express online or access the e-paper edition.
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