Deposits secure in merging banks; govt to get back investment with profit: Governor

Deposits in banks undergoing mergers are completely safe and the government will recover its financial assistance with profit, Bangladesh Bank Governor Ahsan H Mansur assured today (31 July).

"Deposits in banks undergoing the merger process are completely safe. Everyone will get their money back," said Ahsan H Mansur at the unveiling of the Monetary Policy Statement (MPS) for July–December of FY2025–26.

"The government will provide substantial financial support [to these banks] and will recover its investment with profit," he added.

The governor mentioned that five banks, weakened due to loan irregularities linked to S Alam Group, will be included in the first phase of mergers.

He said the government will soon announce the timeline of this process and public confidence in these banks will increase after the mergers.

Drawing on global precedents, he said, "During the 2008 global financial crisis, the US government invested heavily in banks and insurance companies. Many of those institutions later turned profitable and were returned to the private sector. Similarly, our government is undertaking this initiative in the public interest."

He mentioned that they initially restructured the boards of several banks and gave time — around a year — to improve their situation.

"While some banks managed to recover, others did not, so we are taking merger steps for those banks," the governor said.

He further stated that a weak banking system cannot be allowed to limp along. "As the central bank, it is our responsibility to organise the banking sector in coordination with the government."

The governor also said they expect to complete the first phase of the merger process by September.

After that, the banks will become stable through consolidation. In the first phase, a few banks will be merged, and then in the second phase, the rest will be addressed, he said.

When asked how the country's export market would survive without new investments, he replied that the central bank's main goal is to stabilise the monetary market; around this time last year, imports were very difficult because the market lacked dollars.

"Now we have dollars, and our task is to ensure the proper supply of dollars for importing raw materials of industries."

The export sector, especially garments, still has sufficient capacity, he said, adding that they are holding regular discussions with garment owners. However, in terms of investment in the economy, there is a mindset of "people are reluctant to take risks due to uncertainty," said Mansur.

"So we are now trying to support the dollar market, stabilise the exchange rate and maintain sufficient economic activity," he said.

Mansur also said that after the election, they are assuming that the investment climate will improve further.

Noting that it is the responsibility of Bangladesh Bank to create an investment-friendly environment, he said, for that reason, they are increasing dollar supply in the market and trying to bring some balance to the exchange market.

Replying to a query about the instability in of Islami Bank over the appointment of its chairman, the governor said, "The interest groups within the bank that are creating chaos must be brought under control. Whenever any irregularity is detected, Bangladesh Bank takes effective action."

"We receive a lot of information through various channels. We verify them and initiate investigations when necessary," he said.

When asked how much money has been laundered abroad, the governor said the tendency to launder money from Bangladesh has come under much better control compared to before, adding that to freeze or retrieve money from abroad, legal procedures must be followed, and in many countries, this process takes time.

"We have sent requests to various countries through Mutual Legal Assistance (MLA) agreements and are trying to get responses. Once these processes are complete, it will be possible to recover a significant amount of money," he added.