The Bangladesh government is considering a financial restructuring package to rescue scam-hit banks and non-bank financial institutions through bail-ins, mergers, and guaranteed securities issuance to prevent excessive money printing.

Officials said a national intelligence agency, the National Security Intelligence (NSI), has proposed a 17-point strategy to stabilise struggling lenders.

The recommendations include capital restructuring, issuing new shares and bonds, utilising accumulated reserves, and revaluing assets.

The NSI believes implementing these measures under High Court orders would eliminate the need for liquidity injections through money printing—a practice the previous government used to support failing banks. Despite Tk 225 billion in such support, crisis-hit banks have shown little recovery.

The intelligence agency also recommends stronger corporate governance, including electing bank chairpersons from independent directors, limiting family representation on boards, and requiring business expertise among board members.

Bangladesh Bank (BB) has already initiated reforms, including appointing global firms to assess troubled banks and introducing a merger policy in April 2024. However, forced mergers have faced obstacles. Meanwhile, discussions with the IMF on banking sector restructuring are ongoing.

Dr M. Masrur Reaz, an economist, stressed that internal restructuring is crucial as politically connected figures have misappropriated substantial funds. If approved, The NSI’s proposals could shift towards a more sustainable recovery for Bangladesh’s financial sector.