Bangladesh Bank Governor Dr. Ahsan H. Mansur stated today that the nation’s banking industry has recovered from the precipice in the past year, citing a number of actions taken by the central bank following the transfer of power last year.
Speaking at the Centre for Policy Dialogue’s (CPD) “Interim Government’s 365 Days” event, the governor claimed that when the interim administration assumed power in August of last year, the industry was “right at the edge of the cliff.”
The main guest at the discussion was Brig Gen (retd) M Sakhawat Hossain, the Labor and Shipping Adviser. It was chaired by Professor Mustafizur Rahman, a distinguished fellow in CPD.
“Our two main challenges were to stabilise the macroeconomy and reform the financial sector. Reforms can’t be done in a year, but we’ve started these in every area,” Mansur said.
Upon taking charge, the governor said he held meetings with international financial institutions to maintain lines of credit.
“We assured them that we’ll repay every penny we owed, and we did accordingly. Our situation didn’t turn like Sri Lanka or Pakistan,” he said.
According to him, the biggest support in debt repayment came from remittance inflows alongside export earnings over the past year.
Dr Mansur said Bangladesh has never defaulted on its foreign payment obligations and would not do so in the future.
He said the country had accumulated dues but made commitments to settle them as quickly as possible.
“Remittances provided tremendous support, exports performed well, and every bank was instructed to meet obligations,” he added.
On inflation, the central bank governor said that controlling it was a major challenge.
Despite calls to change the rate, Bangladesh Bank has not sold a single dollar from reserves since August 14 of last year. Instead, it has been purchasing dollars at Taka 122.
Since then, inflation has decreased below 10%, and Mansur anticipates further declines below 5%.He pointed out that even if the balance of payments is now in surplus, the economy has not yet drawn the needed investments.
On why no banking commission was formed, Mansur said three different taskforces have been formed to overhaul the banking industry, central bank operations, and reclaim laundered money.
According to Mansur, collecting money that has been embezzled overseas is the most difficult task because it involves coordinating with eight to ten different ministries.
He said major legal reforms are also underway, including extensive amendments to the Bank Companies Act, fundamental changes to the Money Laundering Act — adding asset recovery provisions — and broad revisions to the Bangladesh Bank Order to enhance the central bank’s accountability and autonomy.
Amendments will also be made to the Deposit Insurance Act and the Money Loan Court Act to resolve long-pending loan default cases, he added.
The central bank also plans to amend the Bangladesh Bank Resolution Ordinance to allow it to acquire any bank facing liquidity crises due to irregularities, he said, adding, “There will be no more leniency.”
Mansur informed that a single body would be created for “360-degree monitoring” of all banks to tackle irregularities in a coordinated manner.
The governor further stressed initiatives to make Bangladesh a cashless economy, including the promotion of QR codes, wider credit card usage, expansion of nano-loans, banking education for school students, Taka 200 student bank accounts, housing reforms, revenue department restructuring, and lowering smartphone prices to expand digital banking coverage.
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