At its core, banking is about pricing and managing risk. Trouble begins when risk is quietly recycled within the system rather than reduced or spread adequately across the board. In trading bonds, that is increasingly what is happening in the country’s banking sector.

Directors of eight private banks borrowed heavily from each other’s banks in reciprocal lending practices fraught with serious risks. Some banks went one step further and lent thousands of crores to relatives of these banks’ chairmen or directors. 

What has led to bank failures in the US may look different from what Bangladeshi banks are living through now, but the bottom line is the same.