Reform must come from within

The banking sector in Bangladesh is at a crossroads. Non-performing loans, the near absence of corporate governance, weak risk management practices and a lack of accountability have all prompted urgent calls for reform. International models are often considered key solutions, and consultants from abroad are brought in as preferred advisers. Yet, the real strength of sustainable reform lies in the knowledge, experience and contextual understanding of local professionals.

Local professionals possess a deep grasp of local complexities. They hold first-hand knowledge of the political and economic dynamics, regulatory frameworks, banking practices, culture and customer mindset. They are also embedded within a rich web of formal and informal corporate knowledge.

These insights are essential in designing reforms that work in a local context. Imported models often fail, as they either overlook or fail to grasp local realities. In contrast, local experts bring an informed understanding of real-world dynamics, the advantage of language, and cultural intuition. These professionals come from banking, accounting, legal and financial sectors, and include both working and retired practitioners.

In such a complex environment, institutional memory and operational knowledge are vital. Professionals in Bangladesh have decades of hands-on experience and retain corporate memory, having witnessed the post-liberation asymmetrical banking boom, unstructured nationalisation of banks, the rise of private institutions and years of unchecked growth. They have also seen political interference in the central banking system, the stimulus loan fiasco during Covid-19, the self-serving agenda of bank owners and chairpersons under the Bangladesh Association of Banks (BAB), and the massive scams exposed after August 5, 2024.

Taken together, these episodes form a collective memory that cannot be replaced by textbook knowledge.

Hiring local experts is cost-effective and ensures long-term sustainability. Foreign consultants, by contrast, are often expensive and offer only short-term solutions. External models frequently provide ad hoc prescriptions. Local professionals, however, take ownership of reforms and can be retained for the long haul. Real reform demands committed leadership that remains accountable over time.

Engaging local experts also helps build public trust. Bank staff, customers and regulators are more likely to support reform when it is led by those who speak their language and share their realities. Empowering local professionals is a step towards self-reliance and national capacity-building.

This is not to say there is no role for foreign expertise. We support engaging international professionals for capacity-building, particularly when global best practices can be aligned with local insight. Bangladesh already has bankers, accountants, legal and financial experts of international standard, who can bridge global standards with local constraints.

In conclusion, banking reform must emerge from local needs. It should be rooted in institutional memory, guided by experience, and driven by professionals from within. While international collaboration has value, meaningful change can only happen when those who understand the past and are embedded in the nation's banking history are given the power to lead the way.

Engaging local professionals is not a lofty ideal. It is a practical step and the preferred national path forward.

The writer is a former banker. He can be reached at [email protected]