True ownership of S Alam loans, shares under fake names to be proven thru state witnesses: BB governor

State witness testimonies will be presented in court to establish the true ownership of shares and loans acquired by S Alam using fake or proxy names. Bangladesh Bank Governor Ahsan H Mansur revealed this in an exclusive interview with The Business Standard, where he discussed the central bank's ongoing efforts to recover laundered and concealed funds.

The interview was conducted by TBS Special Correspondent Jebun Nesa Alo and Staff Correspondent Sakhawat Prince. This is the second instalment of a three-part series.

Question: How can the true ownership of shares and loans taken out by S Alam under proxy or false names be proven in court?

Answer: True, in many cases, the documents don't bear the real name. But banks have carried out forensic investigations. These show that, regardless of the route taken, the funds ultimately ended up with one beneficiary family.

In some cases, we'll also have state witness testimony – individuals who were involved in the transactions and will testify that they assisted or partnered in the process. With such testimonies, often secured in exchange for reduced sentences or penalties, we believe it will be possible to establish the actual ownership in court.

Many are frustrated about the lack of recovery of laundered money. How much do you think can realistically be retrieved?

I won't specify an amount now, as much of the laundered money remains a "bird in the bush", This means it's not yet within our grasp.. We focus on what's "in the cage" and can act on.

We've made progress with asset freezing, tracking, and related measures. Our first goal is to freeze assets, then recover funds through legal procedures – a process that usually takes four to five years.

One is the legal process – which is quite lengthy. The other is negotiation – where we're trying to repatriate some funds through dialogue.

Many launderers are still in the country, but some of their money is abroad. We want to dismantle this vicious cycle and recover the money through constructive negotiation.

How are the current money laundering cases being handled, especially those filed by the ACC?

If the Anti-Corruption Commission (ACC) files a case, the central bank's role is limited—it becomes a criminal, not civil, matter. That's why we must decide upfront how to handle each case, a process we call "deconflicting."

We are appointing a panel to review cases and classify them as civil or criminal. Based on this, we'll take appropriate pre-emptive action. This process is underway.

Many businesspeople are seeing their accounts frozen and fear arrest. Will this discourage new investment?

Let me state clearly: Bangladesh Bank has not intimidated any business. Our goal is to ensure that every enterprise remains operational. We do not want to shut down any institution. If other agencies have taken such actions, I can't comment on their behalf. Our objective is to keep the economy active. When businesses function smoothly, the economy stays on track.

What is your view on the ACC and other law enforcement agencies?

If the ACC wants to take action, they are free to do so. They may have information I don't. Our role is to support deserving businesses; law enforcement handles legal action. We must keep these roles separate.

So, is negotiation possible at any stage?

It's a complex issue requiring coordination between the government, ACC, and other agencies. We haven't yet decided how feasible this is. That's why I've proposed a neutral legal body to classify cases as civil or criminal.

A year ago, the dollar price was surging and reserves were falling, but now the central bank is buying surplus dollars from the market. How is such a dramatic shift possible?

From day one, I've been clear: our goal is exchange rate stability – not a fixed rate, but one aligned with the market. To curb inflation, the rate must remain stable. That was my priority.

Since taking office, we haven't sold any dollars from reserves. All outstanding foreign payments have been fully settled through banks using market funds. A few months ago, we shifted to a flexible exchange rate. Many predicted it would soar to Tk150–170, like in Pakistan and Sri Lanka.

How intense was the international pressure at that time?

There was also pressure from international quarters, saying they would release loan funds only if we adopted a market-based rate. But I said – let us first observe and understand the market, bring stability, and only then move to a floating rate.

Even newspapers said no one knew what Bangladesh Bank was doing. I made it clear I wouldn't act blindly – I needed to understand the market first.

After five to six months, the market stabilised with no major supply-demand gaps. That's when we adopted a market-based floating rate, which has worked well.

Now, excess liquidity has built up. Dollars are abundant, so we've started buying at Tk121, boosting reserves and maintaining market balance. We'll buy more if needed.

Reserves are increasing, but many say it's because business and imports have declined. What's your take on that?

It's the responsibility of businesses to import, not Bangladesh Bank's job to force imports. Currently, there are no restrictions, no margins, no conditions on imports. If someone wants to invest, they should – it's the investor's decision. The government's role is to create an investment-friendly environment.

Some claim imports have declined. But is there any shortage of goods in the market? Can anyone say something is unavailable? Everything is there. So why should I force imports? Let the market run at its own pace.

When the economy recovers and imports rise, do we have the capacity to handle that?

The purpose of a floating exchange rate is to keep the market in equilibrium. If dollar demand increases and supply falls, the rate will naturally depreciate slightly. That's expected.

I've always assumed there would be such fluctuations in the market. I believe rigid fixing is not the right approach – it's like sealing milk with a tight lid; under pressure, it bursts.

Take India as an example – the rupee gradually moved from 45 to 86 without issue. In Bangladesh too, the dollar will remain market-driven.

Do you believe inflation will drop further in the coming months?

Our goal is to bring inflation below 5% by next March. If policies are sound, inflation will fall. Supply-side issues and political unrest could alter this, but we expect stability.

The central bank ensures dollar availability so vital imports – fertiliser, fuel, gas, pharmaceuticals – continue flowing. We supply fertiliser to farmers but don't farm; we provide fuel for factories but don't manage them.

When I joined Bangladesh Bank, daily calls demanded $100–200 million for overseas payments, or ships wouldn't sail. Some warned of famine without Boro season fertiliser. Despite low reserves, we managed the dollars.

Now there's no such pressure – no one is calling. The market is operating normally. Ensuring adequate dollar supply and keeping the economy running – that is the central bank's job.

What is your stance on foreign currency reserves?

Foreign currency reserves are a must for any economy. Without them, a crisis is inevitable. We have managed to overcome that risk. If we can handle macroeconomic management properly, if politics remains stable, and if elections and the transition of government happen smoothly, then we can sustain this progress.

Our current gross reserves are \$30 billion. I aim to raise this to $40 billion, Insha'Allah. We want reserves to cover six months of imports; currently, we're just below five months. According to BPM6, $30 billion is needed for six months. I won't set a timeline, but with steady progress, it should happen soon.

With a new monetary policy coming up and private sector investment low, what are your thoughts on interest rate policy?

My position is very clear. There must be at least a 3% gap between the policy rate and inflation. In other words, the policy rate should be 3% higher than inflation. If we can bring inflation down to 3% or 4%, then the policy rate will fall to 6–7%. Consequently, interest rates will be around 8–9%. That is our target.

However, some preconditions must be met to achieve this.

There has been much controversy over the white paper. Why is there a discrepancy between their figures and yours?

These two numbers are not contradictory. The $17–$20 billion I refer to concerns money laundering through the banking sector. This accounts for about 50% of the banking sector's non-performing loans.

The white paper's figure of $234 billion is a separate matter. It includes wealth accumulated through corruption and other means, which may not involve the banking sector. For example, the vast assets that land ministers or political figures have amassed abroad are not from bank money but from corrupt funds.

In our country, each service branch has its own bank – is this really necessary?

To be honest, these are political creations. There are the forces bank, officers bank – and now there are talks of a customs bank too. Next, they might say every district needs its own bank!

If these banks operate like regular banks, then what's the point of keeping them separate? What we need are strong banks that meet international standards. Yet, we don't have a single bank here that can gain international recognition.

Around 20 NBFIs are on the red list, and depositors are not getting their money back. What are your thoughts on this?

There are 35 to 36 NBFIs (Non-Bank Financial Institutions) in the country, but how many are truly successful? Only four or five institutions are doing well. We are currently working through the process.

Fifteen to twenty NBFIs will be liquidated. We are also considering partial compensation for depositors, although the government has no legal obligation to do so. Liquidating these institutions will require around Tk10,000 crore to Tk12,000 crore.

We are rethinking measures to include non-bank financial institutions under insurance coverage. This would at least provide depositors with partial security in the future.