New Delhi, Nov 9 (IANS) Standard Chartered Bank’s announcement that it plans to sell its retail banking business in Bangladesh, following HSBC’s earlier decision to wind down its retail banking operations, raises the questions of whether global banks are losing confidence in the country’s Bangladeshi market, according to an article in Dhaka-based Prothomalo.com news portal.

The withdrawal comes at a time when Bangladesh’s banking sector is grappling with problems such as non-performing loans, capital shortfalls, weak corporate governance, irregularities and a crisis of depositor confidence, the article states.

Such business restructuring by global banks is also taking place in other countries as major banks are increasingly seeking to concentrate their capital in markets and business segments where they can generate relatively higher profits and better returns on investment. However, at the same time, Bangladesh’s own market conditions cannot be ignored, the article further states.

It highlights that Bangladesh’s banking sector is currently grappling with problems such as non-performing loans, capital shortfalls, weak corporate governance, irregularities and a crisis of depositor confidence.

Politically influenced lending, loans to related parties and the failure to take effective action against major loan defaulters have further exposed the sector’s institutional weaknesses.

According to data published by Bangladesh Bank, by the middle of 2026, nearly one-third of the country's total banking sector loans had become non-performing. The World Bank has also highlighted capital weaknesses in the country's banking system.

In such circumstances, the withdrawal of two prominent international banks from retail banking could create negative perceptions among investors and customers. However, it would be inaccurate to interpret these decisions as evidence of a complete loss of international confidence in Bangladesh's economy or banking sector. Withdrawing from retail banking and completely exiting a country are two different things, the article observes.

At the same time, the article highlights that the key challenge facing Bangladesh’s banking sector today is to restore institutional credibility. This requires appointing qualified and competent individuals to bank boards, ensuring transparency in lending, controlling related-party lending, taking effective measures to recover non-performing loans, and ensuring independent and rigorous oversight by the regulatory authorities.

Domestic banks must not limit themselves to competing over branch expansion or customer acquisition. They must also ensure efficient capital allocation, sound risk management, technological capabilities, and compliance with international standards.

--IANS

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