Task force activities to be visible in banking sector reforms: Governor
September 23, 20244 Mins Read

Own Correspondent: Bangladesh Bank recently formed a 6-member task force to reform the country's banking sector under the leadership of the new governor. Two meetings of the task force have already been held. In the meeting, 14 officials of Bangladesh Bank were selected for inspection. The task force will begin its activities in full swing with the appointment of some foreign inspectors.

In this case, in the first step measures will be taken by assessing the assets of 3 banks including Islami Bank. Then in the second and third phase this program will be conducted in 3 more 9 banks.

After the second meeting of the task force on Monday (September 23), Bangladesh Bank Governor Dr. Ahsan H. Mansoor.

Husne Ara Shikha, spokesperson and executive director of Bangladesh Bank, was present on the occasion.

The governor said that the task force will mainly work on 3 issues. First of all, the damaged assets of the banks will be determined. It will then identify where the banks assets are. It will then work to restore that resource. In this case, in the first phase, 14 officials from Bangladesh Bank have been divided into 3 groups and given that responsibility. Among them, 4 officers will be given in two groups. And there are 6 people in the other group. In this case, since Islami Bank is a big bank, there will be 6 officers in charge of inspection. In addition, inspection bodies and foreign inspectors will be added. Development partners will provide these funds.

He said, we will first see how much money has been withdrawn from the bank in name or anonymous. After that, if the money goes out of the country, then I will work on how to bring it into compliance with international law. In this case we will deal with big cases. If we have bad assets like 4 lakh crore rupees, half of it has gone to few people. That's why there will be more focus on them. And the smaller ones will be brought up in a systematic way.

The governor said, we have already dissolved the board of 11 banks. As the impact of remittances increases, the liquidity crunch will subside. When they sell remittances, they will receive money. This is how they can recover.

He said, Bangladesh Bank has not reached any decision regarding merger. We will try to merge small banks. It would be great if you could. As we will provide capital support to these banks, there will be no problem. Because the previous owners of many banks have lost their ownership due to irregularities. Now it will be easier to consolidate that ownership in the case of the government. But we will work by understanding the reality. But it would definitely be better to reduce some banks.

In this case, even if the bank is merged, the money will be returned to the depositors, he said.

The governor said that customers are withdrawing money from some banks and depositing it in other banks. Banks from which money is being withdrawn are facing liquidity crisis. Again, the liquidity of those who are being held is increasing. That's why we as guarantor will give money to banks with more liquidity than banks with less. In this case, if the weak bank fails to pay, Bangladesh Bank will pay the money. So far no one has been paid from this scheme. If their condition improves then no one will have to pay. I will give as needed. Money will be given according to who needs money. But these banks now have good cash flow. Banks have a liquidity surplus of Tk 810 crore in the last few days. Hope the problem will be solved.

He said the policy rate will be hiked again this week to counter rising inflation. Then there will be some more increments in the coming months. Currently the policy interest rate stands at 9 percent. The policy rate hike was in line with International Monetary Fund (IMF) advice as the country's inflation has been above 9 percent since March last year.

The governor said, I am optimistic that inflation will come to a better place by March-April. It may not be possible to say how many good places will come. But we will tighten policy so that inflation comes down. We now have a stable exchange rate. Besides, remittances are also increasing. Hopefully the exchange rate will remain stable in the future. If this can be sustained then inflation will surely come down. Moreover, the target of borrowing from banks in our budget may be reduced by Tk 50,000 crore. If this is the case, private investment will also be fine. Overall if we can bring inflation down to 4-5 then we can bring down interest rates. Time should be given for that.