Banking reforms to continue: Finance minister assures BB governor

Finance Minister Amir Khosru Mahmud Chowdhury has assured that the new government will continue the ongoing reform programme in the banking sector.

Speaking to journalists after a one-on-one meeting with the finance minister at the Secretariat today (23 February), Bangladesh Bank Governor Ahsan H Mansur said the central bank had briefed the minister on the progress of various reform initiatives undertaken over the past several months.

"We presented a briefing to the finance minister outlining the reforms we are implementing. He emphasised continuing these activities. He was very positive," the governor said.

Responding to questions from reporters, the governor said controlling inflation remains one of the government's top priorities.

"Inflation must be brought down – there is no disagreement on that," he said.

He noted that efforts are underway to curb excess liquidity in the market, coordinate interest rate management and tighten monetary policy to contain inflationary pressure.

The meeting also included detailed discussions on reducing non-performing loans (NPLs). The governor said measures have been taken to strengthen legal action against large defaulters, tighten loan restructuring policies, identify wilful defaulters and bring greater transparency to banks' classification processes.

He added that regular discussions are being held with bankers, many of whom believe the impact of the recent measures is already becoming visible. At the same time, necessary support is being provided to ensure the continued flow of credit in the economy.

The governor said discussions were also held regarding the merged Islamic bank formed through the consolidation of EXIM Bank, Social Islami Bank, First Security Islami Bank, Global Islami Bank and Union Bank.

He stated that maintaining stability at the merged bank is now the primary objective. The deposit situation is gradually improving, with old depositors receiving their funds and new deposits beginning to flow in.

The process of appointing a new managing director was underway, but has been delayed after a potential candidate fell ill. Until a new MD is appointed, the administrator and board of directors will continue overseeing reform efforts. Extending the tenure of the board, if necessary, was also discussed.

The merged bank has an authorised capital of Tk40,000 crore and paid-up capital of Tk35,000 crore, of which the government has contributed Tk20,000 crore.

During the tenure of the ousted Awami League government, the financial sector faced allegations of irregularities and corruption. Criticism persisted over banking sector loan scandals, capital flight, rising default loans, politically influenced loan approvals and weak oversight.

In this context, after assuming office on 8 August 2024, the interim government initiated a series of reforms to restore discipline in the financial sector. These included bank mergers, strengthening central bank supervision, action against large defaulters, reconstituting boards of directors and providing liquidity support. However, due to time constraints, not all initiatives could be fully implemented.