'Conflict of interest'
Loan rescheduling, business ties raise questions over new governor’s appointment
The appointment of Md Mostaqur Rahman, a cost and management accountant and garment factory owner, as governor of the Bangladesh Bank, has sparked sharp debate.
The reaction is hardly surprising. A central bank is not just another regulatory outpost; it is the custodian of monetary stability, financial discipline and institutional credibility - all of which are fragile and in urgent need of repair.
This debate is not about a man; it is about the integrity of the monetary system.
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At the centre of the criticism lies the question of conflict of interest – sharpened further by reports that he recently rescheduled Tk89 crore in loans from a private bank with only a 2% down payment under a lenient facility.
There is a potential conflict of interest, no denial.
Bangladesh's garment sector is deeply intertwined with bank credit, exchange rate policy and export incentives. A governor who owns an export-oriented business stands at the intersection of policies that could materially affect his own sector. Even assuming personal integrity, perception matters. Central banking runs on credibility and credibility depends as much on appearance as on action.
"There is a potential conflict of interest, no denial," said Muhammad A Rumee Ali, former deputy governor of the Bangladesh Bank. He said the new governor had taken loan rescheduling benefits under the policy support extended and approved by the central bank.
There is also the question of expertise. Running a factory's balance sheet is vastly different from steering a country's monetary framework. The governor must navigate inflation dynamics, exchange rate pressures, reserve adequacy and systemic banking risks, often under global scrutiny. Modern central banking demands fluency in macroeconomic modelling, financial stability oversight and crisis management. Markets rarely offer long adjustment periods.
Appointing an individual burdened with conflict of interest as governor of Bangladesh Bank constitutes a clear breach of BNP's electoral commitment.
Signal matters too. Appointments to Bangladesh Bank are closely read by investors, multilateral lenders and rating agencies as markers of institutional maturity, said the managing director of a private commercial bank. In an economy battling inflation, fragile banks and external stress, even a hint that central bank autonomy could weaken may push up risk premiums and unsettle currency expectations, he added.
Criticism has also come from governance advocates. Transparency International Bangladesh, in a statement released yesterday, questioned whether the new governor could ensure inflation control, financial stability and banking sector governance free from corporate or political influence. Its executive director, Iftekharuzzaman, raised concerns over independence and impartiality.
"Appointing an individual burdened with conflict of interest as governor of Bangladesh Bank constitutes a clear breach of BNP's electoral commitment," said Iftekharuzzaman.
Ridwanul Hoque, a former professor of law at the University of Dhaka, wrote on Facebook that the appointment signals worrying deviations from good governance and the rule of law.
"If the financial and economic sectors cannot be kept free of politics and business tycoons, mega failures are not far away," he warned.
Dr Selim Raihan, executive director of SANEM, said the appointment naturally raises questions. A central bank is both policymaker and regulator; placing a businessman at its helm makes conflict concerns difficult to dismiss.
One private bank CEO put it bluntly: "He is a good guy, a gentleman. But no one is going to marry him. This job needs a different background." The governor, he noted, must engage regularly with the World Bank and IMF and command issues ranging from money supply and exchange rate management to inflation control.
Analysts said private-sector experience is not inherently disqualifying. But the governor's chair demands unimpeachable expertise and neutrality. In emerging economies, central bank independence is not a luxury; it is a stabiliser.
The second debate: The exit of Dr Ahsan H Mansur
The controversy does not end with the new appointment. Many are equally concerned about the manner in which Dr Ahsan H Mansur was removed.
"What is this culture?" said another CEO of a private bank on the unceremonious departure of Dr Mansur, who had taken charge in August 2024 when the banking sector was reeling from insider lending and high non-performing loans.
Zahid Hussain, former lead economist at the World Bank's Dhaka office, questioned the message this episode sends. At the time of his removal, he said, structural reforms were underway. The exchange rate had stabilised to some extent, reserves had increased moderately and remittance inflows were rising.
The manner of Mansur's departure gives a discouraging signal that even competent individuals who take on difficult responsibilities may not be treated with due respect.
Beyond macro indicators, Mansur had initiated internal restructuring within the central bank, bringing in a team of young, reform-minded professionals. He also took several bold and sometimes risky decisions.
"That was his contribution. Whether one agrees with every decision or not, such efforts could have been acknowledged," Zahid said.
He noted that Mansur reportedly met the new finance minister a day before his removal, with no indication of what was to follow. After addressing a press conference the next day, he learned through media reports that he was no longer governor.
"At the very least, he could have been formally informed beforehand. Institutional courtesy matters, especially at that level," Zahid said.
"Instead, the manner of his departure has been deeply unfortunate. It provides a discouraging signal, that even competent individuals who take on difficult responsibilities may not be treated with due institutional respect. In the long run, capable professionals may feel hesitant to accept such positions."
Selim Jahan, former director of UNDP's Human Development Report Office in New York, echoed similar concerns. During Mansur's tenure, he said, reforms were initiated, bank boards were restructured, exchange rate management improved and reserves and remittances showed signs of recovery.
"These are not minor developments. I would say that during Dr Mansur's tenure, the economic sector experienced notable progress," he said.
Now, the question remains: why did he have to leave so abruptly?
When a political government is elected, it certainly has the authority to appoint a new governor. That is not unusual. What surprised many, however, was the manner of Mansur's departure.
Yet no clear explanation has been offered. "I have nothing to say," Finance Minister Amir Khasru Mahmud Chowdhury said when asked about the removal. The new governor declined to speak to reporters at the central bank headquarters in Motijheel. Journalists were briefly asked to wait for a press briefing, only to find the governor had left.
"It doesn't match my math. Only the government knows," said a frustrated businessman on the appointment.
The twin controversies - conflict concerns over the new appointment and questions over the former governor's abrupt exit - have left the bankers, businesses and economists feeling uncertainty at a time when stability is most needed.
