We go to banks for service. We ask for help, we ask for solutions, we ask for speed. And yet, these days, there is a different question sitting in the corner of the room, waiting for its turn: Is my money safe here?
In Bangladesh, that question used to belong to the unlucky few, the person who heard a rumour and could not sleep.
In 2025, it went mainstream. It moved from tea stalls to boardrooms, and it forced the banking system to look at itself honestly.
For years, we lived with two realities at the same time. People inside the system -- regulators, journalists, anyone who followed balance sheets -- knew the sector was in trouble. But most citizens still saw banks as solid buildings with guards, counters, and familiar logos.
After the political transition, that comfort cracked. Bangladesh Bank dissolved the boards of 14 troubled banks, about 23% of all banks, and installed new boards to steady operations.
The reckoning did not stop at banks. The central bank also moved against distressed non-bank financial institutions that failed to return depositors’ money, and in late 2025 it cleared the path to liquidate at least nine NBFIs.
Households feared that they would be losing savings built through small sacrifices, and the exhaustion of feeling ignored for years.
Then the numbers arrived, and numbers usually end arguments.
By the end of September 2025, defaulted loans hit Tk 6.44 lakh crore, 35.73% of all outstanding loans, the highest ratio since 2000.
The sector also faced a provisioning shortfall of Tk 3.44 lakh crore, meaning banks had not built the buffers they should already have to absorb losses already sitting on their books.
In plain language, we were borrowing public trust to cover private failure.
This crisis did not come like a cyclone. It was built year after year through choices: Weak supervision, political protection, and repeated concessions that made loan discipline feel optional.
Defaults were not only tolerated, they were often disguised through relaxed classifications and redefinitions that kept headline ratios looking cleaner than reality.
One remark from that era captured the moral hazard. When criticized for influential borrowers not repaying, the then finance minister reportedly argued that businesspeople are all influential, that they drive most of the economy and jobs, and that without their influence there would be no progress.
The implication was brutal: Influence reduced the obligation to repay. No society can build fair finance on that logic.
Moral hazard has a human price. When repayment becomes optional for the powerful, banks cannot price risk honestly. Interest rates stay high for everyone else. Honest firms pay more, invest less, hire less.
The small manufacturer who pays installments on time ends up subsidizing the borrower who does not. Over time, this stops being a banking story. It becomes an economy-wide drag that chokes private investment and slows job creation.
By 2025, concealment became impossible. As the real picture surfaced, some banks saw defaults exceed 70%, and the system carried a capital shortfall estimated at Tk 1.55 trillion by June 2025. Once confidence breaks in finance, it disappears fast. Rebuilding it is expensive and slow.
So what does a country do when it finally admits the scale of the mess?
Bangladesh Bank has started acting in ways it avoided for too long. The Bank Resolution Ordinance 2025 gives the regulator powers to intervene when a bank is deemed non-viable, including appointing administrators, transferring shares, creating bridge banks to keep essential services running, and in extreme cases reducing shareholder equity to zero.
Deposit protection is the second pillar of confidence. The Deposit Protection Ordinance raised the insured ceiling to Tk 2 lakh and is designed to fully protect around 93% of depositors, while shortening the payout timeline to roughly 17 working days.
The toughest reform test sits with the banks that became symbols of capture. The decision to merge five troubled Islamic banks into a government-backed institution shows both urgency and risk.
Merging weakness does not automatically create strength. The priority has to be clear: Ring-fence depositors, restore basic operations, then rebuild governance and asset quality with transparency, professional management, and a credible recovery plan.
The Islami Bank episode shows why this will take time. Reports indicate that by September 2025, Islami Bank’s bad loans exceeded Tk 1 lakh crore and the provisioning shortfall remained severe.
Delivering fiery speeches alone cannot fix such a brutal portfolio. It means tracing assets, reversing related-party exposures, tightening internal controls, and going through long legal processes.
Depositors, however, cannot be asked to wait until the last case file closes. A bank is a public trust, and when it is compromised, the cost is paid by ordinary families and by the honest parts of the economy.
There was also a small window of macroeconomic relief in 2025, and it helped. Remittances rose sharply, reaching nearly $29.53 billion between January and November, easing pressure on the foreign exchange market.
Reserves improved too. By December 17, 2025, gross reserves were reported at about $32.48bn, while the IMF measure was about $27.81bn, and Bangladesh Bank spoke of a plan to reach $35bn. The exchange rate stabilized near Tk123 per dollar as the move toward a market-based regime took hold.
Still, we should be honest about what “stability” can hide. A calmer dollar market can also reflect subdued imports, weak business activity, and hesitant private investment.
When trade and investment pick up again, pressure can return quickly. That is exactly why reform cannot be postponed until the economy is booming.
The way forward is not one dramatic act. It is rebuilding the boring plumbing of finance, day after day.
Bangladesh Bank needs credible autonomy, not symbolic autonomy, so supervision and monetary policy are insulated from short-term pressure, and state-owned banks can be reformed without confusion from dual lines of control.
Tight monetary policy in 2025 also helped bring inflation down to around 8% by year-end, and that discipline needs to hold, because unstable prices always punish depositors and wage earners first.
We also have to stop pretending every default is the same. A genuine business hit by shocks is not the same as an embezzled loan dressed up as a project.
Separating fraudulent and unrecoverable exposures, recognizing them as losses, and building realistic restructuring for viable firms can reduce the headline burden and let honest finance breathe again.
At the same time, there must be visible consequences for wilful defaulters: Faster tribunals, transparent disclosure, asset recovery, and restrictions that remove the rewards of default.
Bangladesh’s banking sector is not beyond repair. But repair takes seriousness, patience, and a willingness to disappoint powerful people.
Trust returns slowly. It returns when depositors are paid on time, when a bank can fail without chaos, when scams lead to punishment, and when an honest entrepreneur can access credit without a godfather.
If 2025 was the year we finally faced the truth, then 2026 has to be the year we start earning trust again.
Mamun Rashid is an economic analyst and the first Bangladeshi CEO of a global bank.
