Notwithstanding various regulatory rescue efforts to keep all the crisis-hit commercial banks operational, Bangladesh Bank Governor Dr Ahsan H. Mansur gives up hope of keeping a few alive on government doles.
He says the central bank has been working hard to make the struggling banks exist in the market through establishing corporate governance there.
"It may not be possible despite our efforts," he made the observations virtually during a session on 'Macroeconomic Policy and Governance in the Banking Sector' on the final day of a two-day conference titled 'recommendations by the taskforce on re-strategising the economy'.
The Centre for Policy Dialogue (CPD) organised the conference at BRAC Centre In here where the taskforce put forward a bunch of proposals for the betterment of the banking industry. The programme was moderated by CPD distinguished fellow Dr Mustafizur Rahman.
Regarding fate of the troubled banks, the governor said a bank-resolution act is being processed wherein all the options like liquidation, mergers and recapitalisation will be incorporated.
He mentions that the central bank keeps meeting with the top management of the banks and inquiring about their progress on a regular basis. "We'll be able to reach a decision point like which bank requires what in line with the resolution act."
Sharing good progress made by two private commercial banks--UCB (United Commercial Bank) and Islami Bank Bangladesh--he said both banks are now functioning without props from the central bank.
"And the rest are in intensive care," said Mr. Mansur, who took charge of the central bank in mid-August after the recent mass uprising that toppled Sheikh Hasina's governing regime.
Apart from rescuing the liquidity crisis-ridden banks, he told the audience, the central bank is also working relentlessly in respect of deposit insurance act for protection of the depositors.
Simultaneously, they plan to include some provisions in the loan contract, allowing banks to take controlling stake of the default borrowers and bank will become a shareholder and sit on the board.
Regarding loans that got stuck in the legal process, he said they had talked to the interim government and were preparing documentation before sitting with the attorney-general to find ways to lessen the burden of writ petitions.
A total of Tk 1.78 trillion got tied up in 72,543 cases in money-loan court as of February 2024, according to Bangladesh Bank's roadmap to reduced classified loans. About abolishing FID or financial institutions division, he responded tactfully, saying that the division can exist only to govern insurance sector, not the banks. "BB should be the regulatory body for both public and private banks."
Regarding postponement of full-scale digital-banking operations in the country, he said the regulator is not considering operations of such banking right at the moment. "It will take time."
Instead, he said, they have been paying intensified focus on digital transformation like interoperability and RTGS upgrading in the banking sector that will make the transactions faster, easier and convenient to all.
Speaking as guest of honour, chairman of the National Bank Abdul Awal Mintoo said theirs was one of the leading banks when he was forced to leave the board of the lender.
"But now it is one of the underperforming banks that I agree. But the regulator keeps talking about closing bank. Shut the economy, BB is talking much," he said.
According to the recommendations, the taskforce underscores the importance of depoliticising bank boards, ensuring proper loan sanctioning, stopping rescheduling and write-off, postponing digital banks, strengthening internal control and compliance of banks, shutdown of banks kept on life support, upholding autonomy of the central bank, an end to issuance of new bank licence, end to bailout of banks through recapitalisation, closing down FID, holding former governors accountable for their misdeeds, publishing the investigation report on BB reserve heist, preventing government officials from becoming governor of the central bank, formulating exit policy for troubled banks and establishing additional specialised courts and tribunals and amending the bank company act.
Chairman of Bangladesh Association of Banks (BAB) Abdul Hai Sarker, Managing Director and CEO of Mutual Trust Bank PLC Syed Mahbubur Rahman, Professor and former chairman of the Department of Banking and Insurance at the University of Dhaka Dr Md Main Uddin, Taskforce members Dr Fahmida Khatun and Dr Monzur Hossain and BB director (chief economist unit) Dr Md. Selim Al Mamun, among others, also spoke at the event.
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