TIB questions impartiality of new BB governor, raises doubt about ability, conflict of interest concerns

Transparency International Bangladesh (TIB) has expressed concern over the independence and impartiality of the newly appointed Bangladesh Bank Governor Mostaqur Rahman, questioning whether he will be able to carry out his responsibilities free from corporate and political influence.

In a statement issued today (26 February), TIB Executive Director Iftekharuzzaman raised doubts about the governor's ability to ensure inflation control, financial sector stability, and good governance in the banking sector, citing his background as a readymade garment and real estate entrepreneur.

He said, "The newly appointed governor's experience in the banking sector primarily involved being a borrower, later a loan defaulter, and subsequently benefiting from loan rescheduling under special consideration."

Md Mostaqur Rahman FCMA has been appointed governor of Bangladesh Bank for a four-year term, replacing Ahsan H Mansur.

The Financial Institutions Division (FID) of the finance ministry issued a gazette notification yesterday (25 February) confirming the appointment of Mostaqur.

Mostaqur currently serves as chairman of the BGMEA Standing Committee on Bangladesh Bank and is the managing director and CEO of Hera Sweaters Limited. He was also a member of the BNP's election steering committee during the 13th national election held earlier this month.

In the statement, the TIB chief also referred to the governor's involvement in influential business lobbies, including the readymade garment and real estate sectors, as well as business associations such as ATAB and the Dhaka Chamber.

He said, "The question is whether the governor appointed in haste will be able to fulfil public expectations of restoring the banking sector that fell into disarray during the authoritarian kleptocratic regime, remaining free from the influence of business lobbies, borrowers, and loan defaulters."

TIB also questioned the broader implications of the appointment, noting that nearly 60% of members of parliament and 62% of cabinet members are businesspersons, while around half of MPs are "loan defaulters" with outstanding recoverable loans at record levels.

In the context, Iftekharuzzaman also questioned the potential risks of appointing a loan-defaulting businessperson, with experience of obtaining loan rescheduling under special consideration and benefiting from policy capture in sectors such as the readymade garment industry and Rehab, be for the banking sector?

"Through this appointment, what message is being conveyed nationally and internationally? We urge the government to reflect on these questions," he added.

He described the appointment as unprecedented, noting that it is the first time a businessperson has been appointed governor of Bangladesh Bank.

The TIB chief warned that such a move risks turning the central bank into an instrument serving business lobbies rather than safeguarding national economic interests.

TIB also raised concerns over the governor's alleged political affiliation, stating that he had served as a member of the election management committee of the ruling party.

Iftekharuzzaman said, "The government must also consider how prudent it was to entrust the central bank's leadership to a member of the election management committee of the ruling party. Moreover, the BNP, in its election manifesto, pledged to ensure good governance in the banking sector, discipline in financial institutions, and transparency and oversight.

"Appointing an individual burdened with conflict of interest as governor of Bangladesh Bank constitutes a clear breach of that electoral commitment. The current government is well aware of the fragile state of the banking sector during the fallen authoritarian regime, when partisan considerations and facilitation of vested interest groups by Bangladesh Bank contributed to large-scale money laundering, soaring defaulted loans, and overall economic vulnerability."

The statement emphasised that ensuring strong governance in the financial sector is crucial for restoring public trust and attracting foreign investment amid ongoing economic challenges. It also questioned whether the new governor would be able to take impartial decisions, including punitive action against weak banks, without being influenced by business interests.

Referring to public expectations following the July Uprising of 2024, TIB said there is a strong demand for an independent central bank capable of regulating the banking sector effectively.