Bank audits, as revealed, often show manipulated figures: findings by BB's top official
In a significant move towards enhancing the transparency and integrity of the banking sector, Bangladesh Bank Governor Ahsan H Mansur has emphasised the need for quality financial statements and good corporate governance practices. Speaking at the "Audit and Accounting Summit" in Dhaka on July 9, he highlighted the challenges in ensuring the quality of financial reporting due to significant resistance.
The governor's remarks come in the wake of revelations that audit reports of most banks in Bangladesh contain fictional data, as revealed by the governor himself. This misreporting has led to a massive discrepancy in the financial statements, causing concerns about the accuracy and reliability of the data.
To address this issue, the Bangladesh Bank has initiated a series of key measures. One such measure is the imposition of dividend distribution restrictions. Banks with non-performing loans (NPLs) exceeding 10% of total loans are barred from paying dividends to shareholders for the financial year ending in 2025. This aims to push banks to improve asset quality and strengthen their financial health by preventing payouts when their loan books show significant stress.
In addition to this, the Asian Development Bank (ADB) has provided significant financial assistance of $500 million and an additional $1 billion in budget support to stabilise and reform Bangladesh's banking sector. These funds support phased compliance with international banking norms, enhance regulatory supervision, improve corporate governance, and focus on resolving significant non-performing loans through strengthened asset quality information and liquidity management frameworks.
The Bangladesh Bank is also undertaking Audit and Asset Quality Reviews (AQRs) conducted by global audit firms to identify and address fictional or misreported data. This includes consolidation efforts such as merging Islamic banks and reviewing 11 other stressed banks. These reviews form a diagnostic foundation for evidence-based reforms to improve governance, market confidence, and financial stability.
Legal and institutional reforms are also being pursued. Legislative measures include submitting ordinances to strengthen legal recourse against dishonoured cheques and improve loan recovery processes. The Bangladesh Bank plans to establish asset management companies tasked with managing and recovering troubled loan assets, directly addressing issues of bad loans and misreported financial conditions.
Finance Adviser Salehuddin Ahmed has stressed the importance of audit and accounting in ensuring transparency and accountability in the financial system. He noted that many organisations submit papers that lack quality. He also stated that the government is taking its own initiatives for reforms, and international financial institutions like the IMF and World Bank are only providing technical assistance.
The integrity and transparency of those involved in auditing and accounting are even more critical, according to Salehuddin. He lamented that no visible punitive action has been taken against the identified audit firms yet. He also cited major scandals at IFIC Bank, where inflated financials were used to secure funds for a paper company allegedly linked to Salman F Rahman.
The governor warned that relying on current audit reports could make it difficult to find honest auditors. He emphasised that to earn investors' trust, there can be no compromise in financial reporting, and ensuring corporate good governance practice is crucial for preparing quality financial statements. He further stressed that to restore integrity and stability after the exposure of fictional audit data, accuracy, transparency, and quality of financial statements in Bangladesh's banking sector must be ensured.
These combined measures indicate a comprehensive approach—tightening regulatory oversight, leveraging international technical and financial aid, enhancing audit practices, and reforming legal frameworks—to ensure accuracy, transparency, and quality of financial statements in Bangladesh's banking sector. This approach is expected to restore integrity and stability after the exposure of fictional audit data.
[1] Bangladesh Bank Press Release, July 9, 2025. [2] Asian Development Bank Press Release, August 15, 2025. [3] Bangladesh Bank Website, September 1, 2025.
- The emphasis on quality financial statements and good corporate governance practices by Bangladesh Bank Governor Ahsan H Mansur is part of a broader discussion surrounding the intersection of finance, business, politics, and general-news, as it pertains to the transparency and integrity of Bangladesh's banking sector.
- The European Central Bank, in response to the governance issues in Bangladesh's banking sector, has announced a strategic partnership with the Asian Development Bank to provide technical assistance and financial aid towards enhancing regulatory oversight, improving audit practices, and realigning Bangladesh's banking sector with international banking norms.
