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Democracy in Bangladesh is weakening due to hidden and informal political financing system that operates far beyond the reach of formal regulations, according to a study by the Dacca Institute of Research and Analytics.

Though the Representation of the People Order sets out rules aligned with global standards, the research showed a major disconnect between these formal laws and actual political practices in Bangladesh, resulting in a financing culture dominated by patronage and business influence.

The findings, presented at an event on Monday at the Bangladesh Institute of International and Strategic Studies, were contained in the study report titled Political Financing Culture in Bangladesh and Business Protection: Realities and Pathways to Solutions.

The study indicated that the existing system carried serious consequences for democracy.

Informal financing structures, it stated, tend to favour incumbents, creating financial barriers that prevent new political actors from entering the field and thus reducing political pluralism.

According to the study report, the overall outcome is a political environment in which financial power — rather than transparency, fair competition or policy —determines influence,  ultimately distorting democratic processes and weakening institutional integrity.

The report suggested a series of gradual reforms, including conditional public financing, more realistic spending limits, the use of digital tools for oversight and stronger disclosure requirements.

Transparency in political party financing and electoral financing must be placed at the centre of Bangladesh’s political reforms, Transparency International Bangladesh executive director Iftekharuzzaman said at the event.

He noted that current electoral finance limits cover only campaign promotion, ignoring most actual expenditures, observing that annual audited financial reports submitted by political parties were widely seen as lacking credibility, depth, and overall acceptance.

He also said that the crisis surrounding political finance formed just one part of a wider issue of political capital in Bangladesh, which he described as being shaped by an alliance of money, muscle and religion.

Iftekharuzzaman said that this environment had created a triangular syndicate involving political leaders, business interests and the bureaucracy, which had effectively captured the state with the aim of retaining power, shielding corruption and ensuring impunity.

He said that the influence of business on politics had increased dramatically, pointing out that while businesspeople made up 17 per cent of the MPs in the first post-independence Jatiya Sangsad the share had increased to 65 per cent in the most recent so-called parliament.

Reflecting on recent political developments, he described the post-July uprising period as a lost opportunity, stating that the initial promise of a ‘New Bangladesh’ and a ‘new political arrangement’ had quickly degenerated into partisanship, illegal occupation, extortion, and legal actions based on exchange of money.

Former Electoral Reform Commission head Badiul Alam Majumdar said that the sale and purchase of nominations had become one of the most harmful features of the country’s electoral system, creating space for political ‘business syndicates’ in place of genuine political parties.

He observed that many organisations now operated less as ideological platforms and more as networks dedicated to raising money to secure electoral victories.

As part of wider reform initiatives, Badiul Alam said, a legal challenge had compelled the Election Commission to make political parties’ financial accounts public, and that proposals were put forward — without objection from the parties — to bring them under the Right to Information Act.

Bangladesh Nationalist Party organising secretary Shama Obaid said that Bangladesh’s political funding system suffered from deep-rooted corruption and a lack of transparency, and she described the problem as a broader socio-economic issue rather than the responsibility of any single political party.

Shama proposed a series of reforms, including strengthening the Election Commission, decentralising power to reduce incentives for excessive funding, addressing unemployment to curb illegal expenditures, establishing a transparent judiciary, and ensuring accountability for both politicians and those who wield power through them.

Bangladesh Jamaat-e-Islami assistant secretary general Ahsanul Mahboob Zubair said that the Jamaat adhered to a policy of no income without a receipt and no expenditure without a supporting voucher.

He said that the party’s primary income comes from mandatory monthly contributions from members and workers, including a 5 per cent share of members’ earnings as well as profits from the sale of organisational literature and donations from supporters.

National Citizen Party joint convener Khaled Saifullah called for fundamental reforms in political and business environment to tackle corruption and ensure transparency.

He stressed that honest businesses must be able to operate independently, without being coerced by politicians or hindered by bureaucratic hurdles related to licensing and tenders, which currently force many to align with political interests to survive.

Saifullah highlighted the need for transparent political financing, advocating for people to fund political parties directly and for exploring crowd-funding as a partial solution.

Dhaka University professor Asif M Shahan, bdjobs.com founder AKM Fahim Mashroor, former Election Commission deputy secretary Jesmin Tuli, and Shasha Denims Ltd managing director Shams Mahmud, among others, spoke at the event.