MAMUN RASHID
The Sikder family story now dominating headlines is not merely about one business group’s rise and fall. It is a revealing case study of how weak governance, political patronage, compromised regulation and institutional capture can turn banks into private vaults.
At its core, the saga asks a troubling question: how does a family, with limited visible productive expansion relative to its financial footprint, extract nearly Tk 12,000 crore from the banking system while leaving behind fragile institutions, distressed depositors and systemic distrust?
The answer lies in the architecture of control.
When the Sikders took command of the National Bank in 2009, they did not simply gain influence; they captured an institution. In Bangladesh, ownership of a bank often means far more than financial investment. It can translate into control over governance, credit decisions and executive appointments. Once governance structures weaken, a bank can shift from being a public financial intermediary into a sponsor-driven financing machine.
The repeated removal of six managing directors from National Bank was not just a governance anomaly; it was the dismantling of professional resistance. When management becomes unstable and directors are family-controlled, credit discipline erodes. Loans are no longer assessed on project viability or repayment capacity, but on relationships, influence and negotiated benefits.
This is where “connected lending” becomes central.
Connected lending occurs when bank owners or influential insiders channel funds to related parties through direct loans, proxy entities, shell companies or nominee borrowers. Loans may appear diversified on paper, but remain concentrated in hidden beneficial ownership. Allegations of fake loans, benami loans, inflated rentals and commission-based approvals suggest banking channels may have been used less for investment than for extraction.
Extraction at this scale, however, requires more than internal control. It also needs external silence.
The broader banking ecosystem often enables such behaviour through reciprocal arrangements. Powerful groups survive because other institutions, under political or commercial pressure, participate in cross-lending, weak due diligence or mutual accommodation. Exposure across 11 banks suggests this was not a single-bank failure but a network governance failure.
The reported coercion of EXIM Bank officials over an unsecured Tk 500 crore loan is perhaps the clearest expression of a deeper problem: when intimidation replaces creditworthiness, banking becomes hostage finance.
The most damaging stage may come after disbursement: capital flight.
According to various findings, substantial sums were allegedly transferred abroad through trade manipulation, international cards and layered investments in real estate, hospitality and offshore businesses. This follows a familiar pattern in fragile governance environments: domestic leverage, foreign asset conversion. Banks are left with bad loans while wealth migrates overseas.
The economy bears a double burden. First, depositor trust erodes. Second, recapitalisation pressure often shifts to the public, through inflationary support, government borrowing or reduced productive lending elsewhere.
So, who ultimately pays? Ordinary depositors, taxpayers, honest borrowers and the wider economy.
The Sikder case also exposes the limits of reactive regulation. Freezing accounts after money has moved, or removing directors after institutional decay, may be necessary, but it is not a prevention. Bangladesh banking supervision has too often focused on managing crises rather than strengthening governance architecture.
The lesson is not political or personal. It is structural.
Banks cannot remain vulnerable to family capture, politically shielded boards, weak fit-and-proper enforcement or opaque related-party transactions. Ownership concentration without accountability creates moral hazard. Regulators must move beyond paper-based supervision towards forensic oversight, transparency of beneficial ownership and early intervention.
The question is not simply how the Sikders extracted so much money. The deeper question is what kind of system allowed it for so long. The Sikders are not alone.
The writer is an economic analyst and chairman at Financial Excellence Limited