Tuesday, 25 June, 2024, Reg No- 06
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BB has lost its autonomy, says Fahmida Khatun

Published : Sunday, 19 May, 2024 at 12:00 AM  Count : 199

Fahmida Khatun, executive director of the Center for Policy Dialogue (CPD), has expressed concern that Bangladesh Bank (BB), the countrys central bank, has lost its autonomy. The bank is no longer able to make independent decisions and is instead prioritizing the implementation of external directives.

Fahmida said this while speaking as chief guest in a shadow parliament debate competition organized by Debate for Democracy on bank merger at Dhakas Film Development Corporation on Saturday. Chairman of Debate for Democracy Hasan Ahmed Chowdhury Kiran presided over the event.

Fahmida pointed out a decline in transparency and accountability within Bangladeshs regulatory bodies, including the central bank. This, she argued, has hindered their ability to fulfill their designated roles.
She blamed a lack of good governance for the current state of the banking sector, which has led to a crisis of confidence among depositors. The central bank, according to Khatun, has failed to ensure the safety of deposits.

The debate also addressed the International Monetary Funds (IMF) conditions attached to its $4.7 billion loan to Bangladesh. One of the key requirements is to improve governance within the financial sector. This includes bringing down non-performing loan rates and reducing the vulnerability of the financial system. Merging weak banks with stronger ones is seen as a solution to achieve these goals.

However, concerns were raised regarding the hasty execution of the merger process. Critics argued that a successful bank merger requires a lengthy and meticulous integration process, which seems to be missing in this case. The announcement by Exim Bank, a bank of questionable financial health, to participate in the merger process further fueled skepticism.

Kiran emphasized the need to address the core issues of loan fraud, loan defaulters, and money laundering. He blamed these issues for creating a cancer within the Bangladeshi economy. He criticized the governments decision to merge banks as a potential obfuscation tactic, rather than a solution to the underlying problems.

Kiran highlighted several high-profile scandals that have shaken public trust in the banking sector, including the looting of Basic Bank and Padma Bank, and the vault scam at Union Bank. He pointed out that banks established with political motives appear to be particularly vulnerable.

The lack of transparency surrounding the bank merger process was also a point of contention. Kiran criticized Bangladesh Bank for restricting journalists access to information, despite their role in exposing irregularities within the financial sector.

The debate concluded with a call for renewed political will to restore good governance in the financial sector. This includes holding loan fraudsters and money launderers accountable and restoring public confidence in the banking system.

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