Bangladesh Bank increases supervision of banks to prevent irregularities

The Bangladesh Bank is going to increase its supervision and surveillance over the country’s banks to prevent the increasing trend of irregularities in the sector.

After abolishing four of its previous banking inspection departments, it has now formed eight new inspection departments for smooth surveillance.

These new banking inspection departments were formed through an office order of the central bank on May 3, after the approval of Governor Fazle Kabir.

The departments have been formed to make the inspection work easier and smoother, said Bangladesh Bank Executive Director and Spokesperson Md Serajul Islam.

“The four previous inspection departments were not enough to survey the country’s increasing number of banks,” he added.

Furthermore, the banking regulation and policy department — a vital wing of the central bank — has been divided into two parts, Islam said.

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The central bank has created posts for four new deputy general managers; two joint directors; 24 deputy directors; 19 assistant directors, and four officers for those new inspection departments.

Besides, two new general manager posts have been created for the Inspection Department 5 and Inspection Department 8 after the approval of the Bangladesh Bank governor on April 1.

The new inspection departments are effective from April 29 this year.

“There is a radical change in the inspection activities of banks and this change will make the inspection work smoother and more efficient,” said a senior official of the central bank, seeking anonymity as he is not authorized to speak about the matter.

The change and restructure of the departments will help to reduce the workload on its officials, he added.

However, experts said that the scam and irregularities in the banking sector have increased in recent years owing to the inactivity of the central bank.

“Not just increasing the number of inspection departments, effective inspection is required to prevent the rising trend of irregularities in the banking sector,” said former Bangladesh Bank governor Salehuddin Ahmed.

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He said that the major branches of the bank and authorized dealer branches should be brought under inspection of the central bank.

“Action should be taken after finding scam and irregularities,” Ahmed added.

Now, the total number of scheduled banks in the country stands at 62. 

The central bank inspection teams have found major irregularities and scams at about a dozen state-run and private commercial banks in the last 10 years.