IMF team inquires about progress on enactment of relevant laws

The visiting team of the International Monetary Fund (IMF) on Tuesday inquired about the progress made towards enactment of laws relevant to ensure good governance in the banking sector, sources said.

They raised the issue at a meeting with the Financial Institutions Division (FID), officials said.

The FID officials informed the IMF team that the Deposit Protection Ordinance (DPO) is almost at its final stage of enactment while work is underway for the enactment  of the Bank Resolution Ordinance (BRO).

The IMF team also wanted to know whether the central bank or the FID will oversee enforcement of the BRO. In response, the FID expressed its interest in being the enforcement authority.

The FID officials also raised questions about the role the central bank played during the last 15 years of Awami League regime when massive irregularities have taken place in the banking sector, according to meeting sources.

In response, the IMF team said the issue could be discussed further in the next meetings.

FID Secretary Nazma Mobarek told the FE that mainly the progresses made with legal reforms in the financial sector have been prominently discussed at the meeting.

She, however, said the IMF team did not come up with any prior actions at the meeting.

Officials said the issue of bank resolution funding like the potential contribution for recapitalisation of banks, the backup funding of Deposit Guarantee Fund, and fiscal contingent liabilities from the central bank's liquidity provisions have also been discussed.

The legal and operational efforts to support banks' asset recoveries, the corporate insolvency act, and plans for restructuring state-owned commercial banks also came up for discussion.

syful-islam@outlook.com