I can change the face of the economy within a year: Governor
September 22, 202412 Mins Read
Jumbangla Desk: Bangladesh Bank Governor Ahsan H Mansoor said that our first responsibility is to bring stability to the country's economy. Bringing inflation to 5-6-7 percent.

Monsur

Keeping the exchange rate of dollar fixed around 120 rupees. Increasing the foreign exchange reserves by making them more stable. Pay off unpaid bills and bring them to zero.

So that no one in the world market can say that Bangladesh cannot pay. I think I can change the face of Bangladesh's economy within one year. He said, some banks are in fragile condition. However, keep the deposit where it belongs. You will get your full money back with interest. He said these things in an interview.

Question: The country's economy has started to turn around since you took over, how long will it take to stabilize completely?

Ahsan H Mansoor: Normalcy has largely returned to public life. Now we have to consistently move to a better state. Bangladesh Bank's main responsibility in the economy is to reduce inflation. Earlier, policy mistakes caused inflation to rise rather than fall. Here we have to work. There has been a large volatility in the balance of payments over the past two years. It has to be dealt with. Hopefully, I can change the face of the economy within a year.

Q: Money is flowing like water in the market due to high inflation, when will the inflation come down?

Ahsan H Mansoor: I am hopeful that inflation will come down a little more in the coming months. Officially, our target is to reduce inflation to 7 percent by the end of this fiscal year. Hopefully, the target will be fulfilled within April-May. After that we will try to bring it down to 6 or 5 percent. If we can bring inflation down to 5 percent, we can certainly bring down interest rates. If the interest rate comes down, we can create a demand in the market and increase the flow of loans. We can focus on growth. We have raised policy rates. The new interest rate has been fixed by 50 basis points from the existing policy rate of 8.50 percent. This month we will take it to 9.50 percent, next month we will take it to 10 percent. This is our plan. I will see if it will work in the future. After seeing it, if it is necessary to increase it in the future, I will increase it. Otherwise we will stop there.

Question: Common people are suffering a lot due to high inflation. What do you think?

Ahsan H Mansoor: The biggest and most difficult problem for the common man is inflation. Inflation makes the rich richer, the poor poorer. Those who have wealth increase in wealth. The income of those who are dependent on income decreases. Purchasing power decreases. Our target is to bring inflation to 6-7 per cent by the end of the current fiscal and 4-5 per cent later. 4-5 percent inflation has not happened in the history of the country. If we can do that, I think it will be a big achievement for the government. We are working towards that goal, if we can do it, it will benefit the common people. We need to focus on how to increase real wages.

Question: What steps do you think are necessary to increase illegal expatriate income?

Ahsan H Mansoor: I am optimistic as the rupee exchange rate is now stable at Tk 120 against the dollar. It has been stable for three months. Now there is no difference with the open market. The dollar is lower in the open market after the bank's stimulus to expatriate income. This has never happened in the history of Bangladesh. Now if you send remittance through legal channel you will get more money than illegal channel. This is the first thing we see. This is the positive side. When I took over as governor on August 14, the government's unpaid bill for import of fertilizers, gas, oil was $2 billion. In the space of one month, the amount of arrears has come down to 1.2 billion dollars. 800 million we have reduced. Inshallah we will be able to take it to zero in two-three months. So we are hopeful that we can come out of the things that happened. We have never been like Pakistan, Sri Lanka. But I want the reserve to increase. So far we have enough reserves to cover three months of import expenses. It must be maintained or increased. In the past 1 to 1.1 billion dollars was released from the reserves to the market. I haven't left a single dollar in the market in the last one month. I bought something on the contrary. Our foreign exchange market is big. 75-80 billion dollars are required to meet import expenditure. Another 5 billion is paid in the service sector. All in all it cost us about 90 billion. About 50 billion dollars comes from our export earnings there. Remittance is about 24 billion. Another 5-6 billion comes in the service sector. I want everyone to meet their expenses from this 80 billion. Not even a single penny should be given from the reserve. The exchange rate will be determined entirely by the demand and supply of dollars in the market. Even without selling 1 dollar, the exchange rate remains at 120 taka. Interest rate in our country is very high compared to neighboring countries. As a result money is now much more attractive. 12 to 14 percent interest is being charged on Rs. Interest in dollars is 5-6 percent. 5-6 percent to 14 percent is a huge difference. Why should I buy dollars, I will keep my money in money. That's why we have to keep this difference. Gradually we will reduce this difference. US inflation is 2.5 percent. 11.5 percent in Bangladesh. Currency cannot remain the same. So if we can bring down inflation to 4 percent. Then the difference will be 1 to 2 percent. Bringing this stability is the main goal.

Question: What is Bangladesh Bank's plan to increase private loans?

Ahsan H Mansoor: The government has set a target of borrowing Tk 1 lakh 37 thousand crore from banks. We have said that if the government takes this money from the central bank, there will be no debt in the private sector. Our total annual deposits are 1 lakh 70 thousand crores. Therefore, we have asked to bring down the government loan demand to 80 thousand crores. If that is the case, we will be able to give 55 thousand crores to the private sector. Then the private sector will get a little more credit than the government. The government is also trying to cut costs. Cutting unnecessary expenses. I am optimistic that inflation will come down to 5-6 percent by the end of this financial year.

Question: What are the steps taken by Bangladesh Bank to return the money?

Ahsan H. Mansoor: The problems in the banking sector are huge. As we know, a large industrial conglomerate took over all Islamic banks in seven years from 2017. After taking control, they took out huge wealth and smuggled it abroad. A part of their wealth is still in the country. We think that one family may have taken 1 lakh 15 to 20 thousand crore rupees. Two or three other groups together have taken out 2 lakh crore rupees and smuggled them abroad. Al Jazeera reports that the former Lands Minister has bought 360 houses in London. His brother also bought the same amount of house. It also has homes in Dubai, Manhattan in New York, Singapore, Malaysia. There is no end to the resources! We will try how we can bring these resources back. The condition of these banks is very fragile. We have given new boards to these banks. They will redecorate. The central bank is helping massively. We are providing all kind of support to them. I will revalue every loan. These loans are owned or not. Whether the owner whose name was given is physically present or has no address. They have to be taken out. We can collect from those who are in Dhaka. Be it through negotiation and through court. And some money has been taken by various groups through fraud, we cannot bring them easily. In that case, we have to carry out asset recovery operations. We are doing three task forces on the banking sector. To strengthen a banking sector. The government does not want to own any bank. More than 90 percent of Islami banks are owned by one group. They are not here. So the government has to take responsibility for its maintenance. If they are not found, their shares will be transferred to other owners if they cannot repay the loan. They will give the money to the depositors. We will try to attach the other assets they have. We will cover the major damage caused to the deposit. We have asked our development partners to give us financial support. Banks will be recapitalized with financial assistance and money from the government. It will make the banks stronger, that is our goal. Small banks will be merged to make strong big banks.

Question: Before the previous government came to power, private banks could not have more than two directors from the same family for more than two terms. Do you want to reinstate this provision?

Ahsan H. Mansoor: My personal opinion is that more than two directors of the same family should not have more than two terms. The law should be changed. The previous government changed the law under pressure from bank owners. We will amend the law again. It will be of international standard. We will implement the practices that exist worldwide. We will not do anything new. We will try to establish an acceptable banking system of international standards by making laws of international standards in Bangladesh as well.

Question: There are allegations against Central Bank officials of taking various benefits including giving jobs to their relatives in private commercial banks. Can you stop it?

Ahsan H. Mansoor: I would tell private commercial banks not to accept unreasonable requests from central bank officials. If any official of Bangladesh Bank claims unethical benefits, bring it to our notice, we will take administrative action. We will not tolerate any bad culture, corruption. But I have to cooperate. You don't tell me but tell the media that it won't happen. First I have to say. In many places we interfere unnecessarily. For example, it is not my responsibility to see whether an MD goes abroad or not. They have a board, a chairman, they will see. Who to employ, how much to pay, how long to keep - no central bank looks at these. These belong to their respective boards and management. We will not interfere unnecessarily. When we go to interfere unnecessarily, an unnecessary power comes. Banks will also not give undue advantage if there is no undue interference.

Question: In the past, various decisions were imposed on Bangladesh Bank as well as interference, do you want to stop it?

Ahsan H. Mansoor: Central bank autonomy is important. It creates a firewall; So that the government cannot make any unreasonable demands to the central bank. The central bank should have the ability to prevent that. How will it be? For example, if the president of the United States says to reduce the interest rate, they will not reduce it. They will cut when they think we need to cut now. If the president forbids raising interest rates, they will raise them even if inflation rises. The government and the head of state know this, so they will not make this request. A political storm will blow if requested. We need to build this firewall. As an autonomous institution, the central bank has to do it. That is why the positions of central bank policy makers governor, deputy governor should be identified as very respectable posts. Those who are ethical, internationally or nationally renowned, should be placed in these places. They can ignore political pressures. I won't, let my job go. You have to have the courage to say that. Autonomy is the first and most important step. I will try to get this government to recognize the central bank as an autonomous institution. It will be a major part of central bank reform. At the same time, it should be ensured that the selection of important posts of the central bank is done through a process. Letters should not be issued in the name of a particular person's preferred person. If you can do this, the status will increase to a large extent. If the status of a position increases, good people will also come. I hope we can build the central bank of the future in the same way. The central bank will be a focal agency. It is our responsibility to monitor the condition of the banking sector quickly and if there is any degradation, to remove it quickly and to take punishment. We will return to these. No request will go from the central bank to the commercial bank. If the regulatory body wants the facility, the regulations are compromised.

Question: What is the future of Islamic banking in Bangladesh?

Ahsan H Mansoor: Two strong Islamic banks will be established in the country. Among them there is a bank called Islami Bank Bangladesh Limited. I have requested the International Finance Corporation to invest in it. If they own 5 to 10 percent shares, others will take 50 percent shares. It will fully implement the compliance of the bank. Will turn around again. Apart from this, smaller Islamic banks will be merged to create one big and strong Shariah-based bank. That too will be done with good ownership of the country. In this two strong Islamic banks will be able to do business through competition. Trying to do that. Put your money where it's at. Do not transfer from one bank to another bank. Rest assured you will get all your money back. Give it some time.

Question: After the appointment of the administrator of Bangladesh Bank, the owners of 'Nagad' are saying different things, how do you see it?

Ahsan H Mansoor: If we wanted to kill cash, cash would have died by now. That is not our goal. Our objective is to make Nagad the second largest mobile financial service provider company in Bangladesh. To build a transparent institution like 'Bikash'. No one will question the development's good governance and compliance. The previous government tried hard to demand development but could not due to transparency. We want international finance corporations, international technology companies to invest in cash. Cash is a strategic partner. Let them take cash to a higher level. The more competitors there are, the better services people will get. Service charges will decrease, service quality will increase. I am sure, no customer left cash after acquiring the cash. Everyone is still the same as before. The daily transaction of cash is still 900 crore rupees as before. On the positive side no damage was done. We will try to take the transaction from Rs 900 crores to several thousand crores. Investors will be brought and handed over to them. The government does not want to stay here for long. Government share will be nominal. The propaganda that we are working for development, destroying cash, these are lies. If that was the case, we could have killed Nagd yesterday. We want cash and development to compete equally and serve people.

Question: Do you take any initiative to recover defaulted loans of private bank managers?

Ahsan H. Mansoor: We will not allow the director of one bank to take money from another bank and not pay. They have harmed the bank by giving loans to each other by conspiracies and conspiracies. It is the central bank's responsibility to protect this loss. Here was the failure of the previous leaders of the central bank. Maybe they knew but did nothing. There was political interference, there was influence. Central Bank should be strengthened so that such misdeeds do not happen. Autonomy should be strengthened.

Question: Financial institutions are controlling government commercial banks, should it go to Bangladesh Bank?

Ahsan H. Mansoor: A regulatory body for the banking sector is the Central Bank. Multiple controllers present a variety of problems. As part of the banking sector reforms, the central bank will be strengthened by freeing the banking sector from the financial institutions department.