Ministry defers BB law reform, leaves it to elected govt

The finance ministry has halted proposed amendments to the Bangladesh Bank Order of 1972, describing the changes as politically sensitive and leaving the final decision to a future elected government, officials said.

In a letter to the central bank governor, Finance Adviser Dr Salehuddin Ahmed said that revising a foundational law governing the country's monetary authority required caution, extensive review and consultation with key stakeholders and experts. Such a decision, he wrote, should be taken by a politically mandated government rather than an interim administration.

The letter, sent on Thursday, characterises the proposed amendments as a "sensitive issue" and underscores the limits of the interim government's authority in undertaking major institutional reforms. "If necessary, the elected government will consider amendments to the Bangladesh Bank Order," the adviser said.

The proposed changes were initiated under Bangladesh Bank (BB) Governor Dr Ahsan H Mansur as part of broader efforts to address long-standing governance failures, irregularities and weak oversight in the banking sector. Over recent months, the central bank has moved to restructure the boards of several private banks and pursue consolidation of weaker institutions.

As part of this reform drive, draft amendments to the 1972 order were prepared to strengthen the autonomy and accountability of Bangladesh Bank. The draft proposed reducing the number of government representatives on the bank's board while increasing the presence of independent experts. It also outlined the formation of a search committee for appointing the governor and deputy governors, new internal policies for staff recruitment, and a unified supervisory framework aimed at curbing corruption.

Other proposed measures included raising the central bank's paid-up capital to one billion taka ($9m) and formalising accountability to a parliamentary committee.

The draft amendments were sent to the finance ministry for approval in October, but officials say the process stalled amid bureaucratic delays. Despite several rounds of meetings, no breakthrough was achieved, effectively putting the reform effort on hold.

mirmostafiz@yahoo.com