Bangladesh Bank’s new governor has taken bold steps to fix the battered bank and financial sector. It shows positive results within a month.
In the past one month, the new governor has taken some other difficult decisions, including reorganizing the bank’s board, withdrawing the ban on imports, preventing trade-based money laundering through strict surveillance, increasing the policy interest rate to reduce inflation. The results of which have already started to be seen.
The banking sector of Bangladesh has been going through multi-faceted crisis for the last few years due to the looting and corruption of the Sheikh Hasina government. The crisis has deepened in the past two years as looting has gone rampant. Control of banks through a special group, bank looting in the name of loans and money laundering abroad, rampant defaulted loans, acute liquidity crisis in banks, dollar and reserve crisis have deepened the wounds of the banking sector.
According to the complaint of the sector concerned, the role that Bangladesh Bank was supposed to play as a regulatory body, was not fulfilled by the then Governor Abdur Rauf Talukder. This has increased the customer’s distrust towards the bank.
At such a critical moment in the banking sector, economist Dr. Ahsan H. Mansoor. He took charge of Bangladesh Bank on August 14, the day after the government’s notification was issued on August 13. He has already completed one month. Although the time is short, he has taken several bold initiatives during this time.
Dr. Ahsan H. Mansoor’s biggest initiative was freeing the banking sector from the control of a single group. In all, 11 banks have dissolved the board. Along with that, he has taken a bunch of other initiatives to reform the banking sector.
Analysts of the financial sector say that if these initiatives are implemented, good governance will be ensured in the banking sector in the coming days, as well as bank robbery and money laundering will be stopped.
On September 11, Bangladesh Bank formed a task force to reform the banking sector. Six people experienced in the financial sector have been appointed as members. The central bank governor will be the coordinator of the task force. Ahsan H. Mansoor. Besides taking various steps to reform the banking sector, this task force will publish a white paper.
According to Bangladesh Bank, the government used to give two and a half percent incentives on remittances sent by expatriates. However, from now on, an incentive of 2.5 percent will be given against remittances for compensation of Bangladeshis who die or are physically injured in accidents while abroad. Remittance flow has started to increase.
Due to reduced demand for foreign exchange and stricter monitoring by central banks, trade-based money laundering has decreased significantly. Banks can charge a maximum of Rs 120 for dollar transactions as the new governor introduced a crawling peg exchange rate soon after assuming office. This is also having a positive impact on remittances.
Dollar sales from the central bank reserve have been reduced to a minimum. Reserves are stabilizing with these initiatives taken in less than a month.
Due to the dollar crisis, Bangladesh Bank imposed strictness in opening letters of credit (LC) in 2022. In addition to imposition of 100% margin on several products, loan facilities from banks were stopped. Now the company has withdrawn it as the situation has improved.
Association of Bankers Bangladesh (ABB) Chairman and Managing Director of BRAC Bank Salim RF Hossain told the media, ‘In the last 14-15 years, there have been many irregularities and corruption in the banking sector. Major reforms are needed to bring stability here. The current governor. I firmly believe that this reform is possible in the hands of Ahsan H. Mansoor.
