FE REPORT
Attracting techno-savvy foreign firms in greater numbers is a must-do to drive economic growth in this era, says Bangladesh Bank Governor Dr Ahsan H. Mansur and urges changing "narrow nationalistic mindset" in policymaking.
In today's world, technology is driving business and modern economic growth while its relation with research and development is crucial, he Sunday told a meet where experts deliberated over banking-financial crises stemming from wrongs of yesteryears.
"Innovation, investment and engagement with people who are involved in the research activities are the critical elements of driving the business as well as the economy," Mr Mansur said.
Also, technological application and foreign direct investment are very much related, he added.
He was addressing the closing ceremony of a two-day meet titled 'International Conference on Business and Technology in the 21st Century (ICBT 2025)' at the Nabab Nawab Ali Chowdhury Senate Bhaban Auditorium of the University of Dhaka on Sunday.
The event was hosted by the University of Asia Pacific (UAP) in collaboration with the University of Dhaka and Germany's OTH Amberg-Weiden.
The governor also said to attract more investment and attain economic growth Bangladesh needs to attract more overseas companies.
To make it happen, the country needs to have good infrastructure, dependable electricity, road conditions, airport facilities as well as skilled people.
"That kind of infrastructure, that kind of human resources, that kind of facilities are very critical for attracting technology-based companies in any country," he told the meet.
He also urges changing narrow nationalistic mindset as feels that the policymakers must decide to attract investors because this is ultimately in their interest.
Prof Dr Niaz Ahmed Khan, Vice-chancellor, the University of Dhaka, and Prof Dr Qumrul Ahsan, Vice-chancellor, University of Asia Pacific, were the special guests of the closing session.
Speakers at the meet said "state-sponsored intervention, forcible occupation, irregularities and corruption severely damaged" the country's banking sector during the previous regime.
Highlighting that the crisis is still affecting clients and the sector, they underscored the need for tough measures, good governance and ensuring the independence of the central bank.
Managing Director (MD) of Bank Asia Sohail R. K. Hussain, MD and CEO of City Bank Mashrur Arefin, and MD and CEO of Pubali Bank Mohammad Ali, spoke on the occasion, among others. Dean of the Faculty of Business Studies Professor Dr. Mahmood Osman Imam chaired the session and made a paper presentation.
Speaking on the occasion, City Bank MD Mashrur Arefin said reforms are now essential in the country's banking sector, where 60 banks, including foreign ones, are operating, though the majority of them fail to meet the required standards. There are maximum seven to nine banks that can be considered of global or regional standard, he said.
Referring to widespread corruption that engulfed the banking sector, he said of the 15 most-affected banks, some were looted directly and others indirectly. "All 15 are now suffering from or going through a major liquidity crisis," he said.
Giving an example of the hardships facing depositors, he said a client who deposited Tk 1.2 million is now advised to take out Tk 5,000 per month following his request for withdrawal.
He estimated that some $30 billion or so have been stolen from the sector. However, the sector is now showing signs of recovery following measures taken by the central bank, he added.
He praised initiatives such as the Bank Resolution Act and the amendment to the Banking Company Act, which mandates that 50 per cent of board members be independent directors. He, however, cautioned that requiring half of the directors to be independent may not be a good idea for good banks.
According to him, official non-performing loans (NPLs) stand at about Tk 4.0 trillion, but the total distressed loans are estimated at Tk 11 trillion out of total loans of Tk 18 trillion. "Tk 4.0 trillion is official NPL, but look at the distressed loans - that is another Tk 7.0 trillion. So, in total it is Tk 11 trillion out of Tk 18 trillion, that is 65 per cent," he explained.
In his speech, Bank Asia MD Sohail R. K. Hussain said the banking sector has plunged into a severe crisis mainly due to a lack of good governance and irregularities sponsored by the previous government. He added that all traditional governance layers like boards, management, auditors, rating agencies, and event central bank supervision have failed, leading to a surge in non-performing loans (NPLs) which are expected to rise further.
He said that it becomes extremely difficult to save a bank when its NPLs start exceeding 30-40 per cent. Underscoring the need for protecting depositors, he said 95 per cent of bank's money comes from depositors and only five per cent from directors. He alleged that many directors still run banks at their discretion, often neglecting the interests of depositors.
The MD further said that the government and the central bank must make tough decisions to safeguard the sector. He suggested creating guard rails to prevent state interference, updating the banking fund with time-befitting measures, and strengthening the quality and independence of non-affiliated directors to protect depositors' interests.
Pubali Bank MD Mohammad Ali said a lack of central bank autonomy and heavy political interference, particularly targeting Islamic banks through forced board changes and share transfers in the last regime wreak havoc in the banking sector. He called for rigorous corporate governance reforms in the sector.
The bank official also stressed the need for independent directors with diverse, external backgrounds--such as in law, finance, and economics-- to resist political pressure and ensure stability.
Presenting the paper, Professor Dr. Mahmood Osman Imam said that the origins of the banking crisis in Bangladesh are multifaceted and deeply rooted in systemic governance failures. "Licensing during the past regime was transactional and used as a tool for political patronage," he said.
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