The continuous labelling of banks as "strong" or "weak" by the Bangladesh Bank governor will not facilitate a revival of the banking sector, according to National Bank Chairman and BNP leader Abdul Awal Mintoo.
Speaking at a seminar in Dhaka, he underscored the need to sustain struggling banks rather than closing them down, asserting that banking sector reforms require time and a holistic approach.
Mintoo made these remarks on Tuesday (25 February) during the second day of a conference titled "Recommendations of the Taskforce on Economic Restructuring", organised by the Centre for Policy Dialogue (CPD) at BRAC Centre.
Addressing the session on "Macro-Economic Policy and Governance in the Banking Sector", he expressed concern over the central bank’s communication strategy, arguing that excessive public commentary from Bangladesh Bank is counterproductive.
“The current governor, Ahsan H. Mansur, is a highly esteemed figure. However, if he continues to make public statements categorising banks as good, bad, strong, or weak, the sector will never recover. The central bank speaks too much,” said Mintoo.
He further criticised the taskforce’s approach, stating that it had isolated economic concerns from political realities, failing to acknowledge the role of commercial banks in the national economy.
“The taskforce report has disregarded the contributions of commercial banks. While banks are blamed, they are lending long-term loans against short-term deposits, yet this issue is absent in the recommendations,” he remarked.
Highlighting the country’s structural economic challenges, he argued that political reform is a prerequisite for sustainable economic recovery. “Whom shall we address these concerns to? Those in charge are preoccupied with plunder. The taskforce's report will not solve anything, as the real need is political reform. Without it, no viable solution can emerge. Every year, 18 lakh new job seekers enter the labour market. Without increased investment, how will employment be generated?” he questioned.
He also expressed scepticism over the central bank’s inflation control measures, particularly the reliance on interest rate adjustments. “With an import-dependent economy, can inflation be controlled simply by raising interest rates? They claim inflation has dropped by 1%, but let’s see what happens next month,” he remarked.
Earlier in the same seminar, Bangladesh Bank Governor Ahsan H Mansur provided a grim assessment of the banking sector’s health, acknowledging that while efforts were being made to stabilise the system, certain banks were beyond rescue.
“Some banks have no viable future, as their Non-Performing Loans (NPLs) have reached as high as 87%, with a single group monopolising these loans. Several banks remain under direct supervision, and we are working on resolution strategies. We are in continuous discussions with their boards and management and will soon reach a decision,” said Mansur.
His remarks underscore the precarious state of Bangladesh’s financial sector, where high levels of bad debt and governance issues continue to raise alarm.
The CPD conference served as a platform for experts to debate the necessary steps for economic and financial restructuring, with Mintoo’s comments adding to the growing discourse on the interplay between banking governance and political reform.
