Forex reserves may hit $35b by end of fiscal year: BB governor
The governor admitted that while he initially anticipated the ratio of NPLs to be around 25% to 27%, the reality has proven more severe, with NPLs currently standing at approximately 36%.
Bangladesh Bank Governor Ahsan H Mansur expressed optimism that the country's foreign exchange reserves will climb to between $34 billion and $35 billion by the end of the current 2025-2026 fiscal year.
Speaking at a discussion titled "Banking Sector Reforms: Challenges and Actions" organised by the Economic Reporters' Forum (ERF) in the capital today (18 December), the BB governor emphasised that this growth would be driven by internal sources rather than international borrowing.
Mansur clarified that the central bank is not applying any pressure to procure dollars. Instead, foreign currency is being purchased through market-based auctions.
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He noted that the country is gradually transitioning from a precarious economic state toward stability, asserting that concerns regarding the balance of payments (BoP) and dollar availability have largely subsided.
In a move toward ensuring greater transparency, the governor admitted that the banking sector faces deeper challenges than previously estimated. While he initially anticipated the ratio of non-performing loans (NPLs) to be around 25% to 27%, the reality has proven more severe, with NPLs currently standing at approximately 36%.
He, however, reiterated the central bank's commitment to transparency, stating that no data would be concealed and only the true state of the economy would be presented to the public.
Depositor protection
As part of ongoing structural reforms, the central bank governor announced plans to merge five struggling banks, moving to reassure the public that deposits in these merged institutions would remain secure.
To further safeguard the interests of small savers, the deposit insurance coverage has been set at Tk2 lakh. He suggested that if new entities invest Tk20,000 crore into it, the risk of loss would be virtually eliminated.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank, also participated in the discussion, highlighting the historical context of the current crisis.
He argued that the "mafia system" within the banking sector originated with the forced takeover of Islami Bank, which accelerated the crisis. He pointed out that commercial banks were often forced to engage in long-term industrial financing due to an ineffective capital market.
While noting that the political transition has brought positive changes, including a reduction in dollar market volatility and a steady rise in reserves, Syed Mahbubur cautioned that banking reforms alone would not suffice.
He emphasised that genuine resolution of the sector's deep-rooted issues requires strong political will alongside technical adjustments.
