Transparency International Bangladesh (TIB) has expressed concern over how independently the newly appointed Governor of Bangladesh Bank will be able to discharge his responsibilities, rising above conflicts of interest.
The organisation has also raised the question of how a readymade garment and real estate entrepreneur, who rescheduled loans for his own company under special consideration, will be able to perform his duties impartially as Governor of the central bank.
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In a statement issued on Thursday, TIB Executive Director Dr Iftekharuzzaman said the newly appointed governor’s experience in the banking sector is mainly linked to being a borrower, later a loan defaulter, and subsequently benefiting from loan rescheduling under special consideration.
He said the governor has also played significant roles within influential business lobbies, including the readymade garment sector, the real estate sector, ATAB and the Dhaka Chamber.
Dr Iftekharuzzaman questioned whether a governor appointed in haste would be able to meet public expectations of restoring a banking sector that fell into disarray during ‘an authoritarian kleptocratic regime’ while remaining free from the influence of business lobbies, borrowers and loan defaulters.
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He said nearly 60 percent of Members of Parliament and 62 percent of Cabinet members are primarily businesspersons while around 50 percent of MPs are loan defaulters with outstanding recoverable loans exceeding all previous records.
In such a context, he asked how risky it could be for the banking sector to appoint ‘a loan-defaulting businessperson’ who has benefited from loan rescheduling under special consideration and from policy capture in sectors such as the readymade garment industry and REHAB.
Through this appointment, he questioned what message is being sent both nationally and internationally and urged the government to reflect carefully on these issues.
Referring to this unprecedented appointment—the first time in the country’s history that a businessperson has been appointed Governor of Bangladesh Bank—Dr. Iftekharuzzaman said such a decision risks turning the central bank once again into an instrument of business lobbies dependent on defaulted loans and political connections, rather than safeguarding national interest, as was the case during the authoritarian kleptocratic regime.
He said, “The government must also consider how prudent it was to entrust the central bank’s leadership to a member of the election management committee of the ruling party. Moreover, the BNP, in its election manifesto, pledged to ensure good governance in the banking sector, discipline in financial institutions, and transparency and oversight. Appointing an individual burdened with conflict of interest as Governor of Bangladesh Bank constitutes a clear breach of that electoral commitment.
The current government is well aware of the fragile state of the banking sector during the fallen authoritarian regime when partisan considerations and facilitation of vested interest groups by Bangladesh Bank contributed to large-scale money laundering, soaring defaulted loans, and overall economic vulnerability, he added.
At a time when ensuring good governance in the financial sector including attracting foreign investment is critically important amid ongoing economic challenges, the effectiveness of this appointment remains questionable, said Dr Iftekharuzzaman.