Why does Bangladesh have dual regulators banking industry? Explore the challenges, overlaps, and policy implications of having multiple regulatory bodies like Bangladesh Bank and BSECoverseeing the financial system.
1. Introduction
Bangladesh’s financial system is under the watchful eyes of dual regulatory authorities—Bangladesh Bank (BB) and the Bangladesh Securities and Exchange Commission (BSEC). While each has a specific mandate, the overlap of responsibilities often sparks debate among economists, bankers, and policymakers. A Banking sector is very vital for a country. So, its problems remove and solution need for work all body.
In this post, we break down the need for dual regulators banking industry, examine the benefits and challenges, and explore how this structure affects the banking ecosystem in Bangladesh.
2. Why Dual Regulators?
The dual regulatory system in Bangladesh’s banking and financial sector evolved to ensure robust oversight and risk mitigation. The two primary regulators are:
- Bangladesh Bank (BB): Central bank responsible for monetary policy, banking operations, and foreign exchange regulation.
- Bangladesh Securities and Exchange Commission (BSEC): Oversees capital markets, investor protection, and securities regulation.
These bodies are essential for the stability of the financial ecosystem, but they often overlap in jurisdiction, especially in areas like financial reporting, corporate governance, and bank investments in capital markets.
3. Their Specific Roles and Responsibilities
| Regulatory Body | Key Responsibilities |
| Bangladesh Bank (BB) | Supervises banks and non-bank financial institutions (NBFIs), manages monetary policy, ensures financial stability. |
| BSEC | Regulates stock exchanges, IPOs, listed banks, and ensures compliance in capital market operations. |
Despite their distinct focus, modern financial products blur the lines between banking and securities, leading to conflicts in regulation.
4. Challenges of Dual Regulators Banking Industry
- Jurisdictional Conflicts:
Banks listed on the stock exchange must report to both BB and BSEC, sometimes receiving conflicting directives.
- Delays in Decision-Making:
Regulatory overlaps can cause bureaucratic delays when approvals or policy alignments are required. - Compliance Burden:
Dual reporting standards often increase operational complexity and compliance costs for banks. - Lack of Coordination:
Instances of limited cooperation between BB and BSEC can create policy gaps or enforcement issues.
5. Benefits of Having Dual Regulators Banking Industry
Despite the challenges, regulators banking industry can have strategic advantages:
- Checks and Balances: Prevents monopolistic control over financial governance.
- Specialized Oversight: Each regulator brings expertise to its domain—monetary control vs. market supervision.
- Investor Confidence: Broader oversight can boost transparency and trust among investors and international stakeholders.
6. Global Comparisons
Bangladesh isn’t alone in having dual (or even multiple) regulators. Countries like:
- India: RBI and SEBI regulate banking and capital markets.
- UK: FCA and PRA oversee conduct and prudential aspects separately.
- USA: Multiple regulators including the SEC, Federal Reserve, and OCC.
This suggests that multiple regulators can function efficiently if there is clarity, coordination, and cooperation.
7. What Can Be Done to Improve?
To make dual regulation work more effectively in Bangladesh, the following reforms can help:
- Better Coordination Mechanisms – Establish regular meetings, shared databases, and joint task forces.
- Clearer Policy Boundaries – Define roles more sharply through legal and regulatory updates.
- Unified Reporting Platforms – Introduce digital tools to ease dual compliance.
- Capacity Building – Train regulators to understand overlapping domains like fintech, green banking, etc.
8. Conclusion
The presence of dual regulators banking industry is both a strength and a challenge. While it allows for diversified oversight, it also demands better coordination and communication. A reformed, collaborative framework can transform this duality into a driver of financial sector resilience and long-term growth.
