Weak banks may take 5-10 years to recover: Cenbank governor

Highlights

• Task force to be formed to clarify policies, streamline operations
• 50% of banking agents will be women
• Remittance expected to reach $29 billion this fiscal year
• Export earnings potentially hitting $50 billion

It could take between five to ten years for weak banks to fully recover, Bangladesh Bank Governor Dr Ahsan H Mansur said today (4 March).

"We are closely monitoring the management of weak banks on a daily basis and overseeing their activities. While we have already provided substantial liquidity support, these banks will require 5-10 years to fully recover with adequate capital," he said at a roundtable this morning.

Speaking at the roundtable titled "Path to Recovery for the Banking Sector" organised by The Business Standard at its office in the capital's Eskaton Garden Road, the governor said, "Even banks that have previously overcome financial difficulties in our country have taken a similar amount of time to stabilise." 

Govt to form banking regulatory simplification task force

A banking regulatory simplification task force will be formed to clarify central bank policies and streamline operational processes for banks, the governor said.

The banks have reportedly faced confusion due to multiple directives issued by the central bank over the past few years, making it difficult for them to make timely decisions on various matters.

To address these issues, the governor announced the formation of the banking regulatory task force.

He said it will include managing directors from various banks and experts.

50% of banking agents will be women, BB to issue circular soon

Agent banking is doing very well and 50% of the agents will soon be women, said Ahsan H Mansur.

"My feeling is that agent banking will overtake regular banking. It's a silent revolution," he said.

Regarding the banking sector, the governor said, "We want to move fast and reshape the financial horizon." Efforts to strengthen the central bank are in full swing and the World Bank is helping find the best practices globally, he said, adding that Chief Adviser Prof Muhammad Yunus is keen on the matter.

"We want to ensure independence of the central bank within July-August this year. We will try to solidate the foundation but all reforms cannot be done by the interim government. Reforms will continue when the next government comes to power," said Ahsan H Mansur in his closing remarks.

"Good governance must be sustained to continue the reforms," he added.

Banking Resolution Act to be finalised by July

The Banking Resolution Act is expected to be finalised by July this year, said Mansur.

"At the pace we are moving now, we should be able to enact the Banking Resolution Act by July," he said.

No need to seek foreign loans through 'sycophancy'

As Bangladesh's balance of payments has significantly improved, with a very strong foreign savings position, there is no need to seek foreign loans through "sycophancy", Mansur said.

"We will not compromise. Our external financial position is now very strong," he said.

He also said, "To address the government's budget deficit, increasing revenue is the only solution. If we can increase revenue, we won't need to rely on the IMF. I have already told the IMF that we don't need their money."

He further mentioned, "This fiscal year, our remittance income will be nearly $29 billion. Additionally, if our export earnings reach $50 billion, after paying for imports, we will still have an extra $10 billion."

The governor said, "Our current problem is that we are unable to increase bank deposit growth. Private sector savings are not growing. However, if we can improve the balance of payments, that will help our savings growth