On 25 February, following the removal of Dr. Ahsan H Mansur, garment industrialist Mostakur Rahman was appointed governor of Bangladesh Bank. This is the first time in the country’s history that a businessman has assumed the position of governor. The new government’s decision has raised questions.
Dr. Ahsan Mansur took charge as governor of Bangladesh Bank on 14 August 2024. A retired senior official of the International Monetary Fund, Dr. Mansur’s appointment was widely praised. At that time, the financial sector had nearly reached a meltdown.
Foreign exchange reserves, which had risen to $48 billion in August 2023, had been heavily plundered. The reserves declined dangerously, falling to just $20 billion by 5 August 2024.
The market exchange rate of the US dollar, which had been 87 taka per dollar in 2022, depreciated rapidly, reaching 125 taka per dollar by 5 August 2024.
Out of the country’s 61 banks, 11 were on the brink of bankruptcy.
During the fifteen-and-a-half-year rule of the fallen autocrat Sheikh Hasina, the banking sector suffered the most extensive plunder. Despite there being no need for as many as 61 banks in the country, licenses were granted through Hasina’s arbitrary decisions. These licenses were issued to create extraordinary opportunities for looting capital by her relatives, influential leaders of the Awami League, and oligarchic businessmen and “robber barons” who thrived under her patronage.
There is no second example anywhere in the world where a single individual or group has been allowed to establish control over seven banks.
Research conducted by the white paper committee formed by the interim government revealed that the S Alam Group embezzled and smuggled abroad nearly Tk 200,000 crore from these seven banks. Between 2017 and 5 August 2024, the group siphoned off about Tk 70,000 crore from Islami Bank Bangladesh through various means, pushing the bank to the brink of bankruptcy.
Former land minister Saifuzzaman Chowdhury plundered United Commercial Bank. Meanwhile, Salman F Rahman, industry and private investment adviser to Sheikh Hasina, left more than Tk 50,000 crore in defaulted loans through his company Beximco across various banks.
Although some stability returned to the banking sector during the one and a half years after Ahsan H Mansur was appointed governor of Bangladesh Bank, there was no significant progress in resolving the problem of defaulted loans. In fact, because there were no longer attempts to conceal bad loans as in the past, the ratio of classified loans reported by Bangladesh Bank rose steadily and exceeded 36 per cent by September 2025. After rules on loan rescheduling were relaxed, it fell again to 31 per cent in December, but this provides little reassurance.
An even more serious issue is that the majority of Bangladesh’s defaulted loans have already been smuggled abroad. None of these illicitly transferred funds has returned to the banking system; not a single taka has been recovered during the interim government’s one and a half years in office. Despite this, Mansur managed to handle the crisis in the banking sector with considerable success.
Bangladesh’s foreign exchange reserves rose rapidly during his tenure, surpassing $35 billion on 25 February 2026, the day he was removed from office. For more than a year, Bangladesh Bank managed to keep the exchange rate stable at Tk 122 per US dollar.
The troubled Islami Bank Bangladesh managed to recover and regain stability. United Commercial Bank also overcame much of its earlier crisis. Five Islamic banks that had reached the brink of bankruptcy were merged to form a combined Islamic bank, which has successfully begun operations.
Total bank deposits have again exceeded Tk 18 trillion, and bank lending is expected to grow by 11 percent in the 2025–26 fiscal year.
A governor’s strict oversight of banks may not always align with the preferences of the government. But the stability of the financial sector is far more a matter of sound policy than political loyalty
Despite intense pressure to reduce lending rates, Mansur did not yield, prioritizing the goal of reducing inflation. Remittances were expected to reach about $35 billion in the fiscal year ending 30 June 2026. However, due to the ongoing conflict between Iran and the United States–Israel alliance, there are concerns that remittance inflows may decline from March onward.
Bangladesh’s current account balance, which had suffered severe deficits during the final three years of Sheikh Hasina’s rule, has returned to surplus. The dangerous deficit in the financial account has also been eliminated. These data indicate that the country’s financial sector has regained stability over the past year and a half after emerging from the plunder of the authoritarian regime.
Unfortunately, at this juncture the interim government blocked the proposed amendment to the Bangladesh Bank Order, which was intended to strengthen the central bank’s autonomy. Proposals to amend the Money Loan Court Act and the Bank Company Act were also halted. As a result, the country lost a significant opportunity to reform the banking sector.
Mansur had proposed several reasonable reforms to address the crisis of defaulted bank loans, but these proposals were also thwarted. Was it appropriate to block these initiatives? And will any political government truly accept the issue of Bangladesh Bank’s autonomy?
It is regrettable that Governor Mansur, who achieved such commendable success, had to leave his position. Even though more than two years remained on his contract, it was abruptly cancelled without any discussion with him.
It is not unusual for a newly elected political government to appoint individuals of its choice to key positions. However, considering how successfully Bangladesh Bank managed the economic crisis under Mansur’s leadership, removing him in this manner is difficult to justify.
Had the contract been terminated through courteous discussion, the matter might not have been condemnable. But by dismissing him abruptly and appointing a businessman as governor, it sends the message that political loyalty is the primary qualification for the position. This could be dangerous for the economy.
If the new governor adopts a more lenient stance toward defaulted loans, the banking sector may once again face a serious crisis.
In the past, during Sheikh Hasina’s rule, the weak roles played by two Bangladesh Bank governors, Fazle Kabir and Abdur Rouf Talukder, allowed the culture of plunder in the banking sector to flourish.
Bangladesh Bank is the regulatory authority of the financial sector. Therefore, a governor’s strict oversight of banks may not always align with the preferences of the government. But the stability of the financial sector is far more a matter of sound policy than political loyalty.
* Moinul Islam is an economist and retired professor, Department of Economics, University of Chittagong
* The opinions expressed are those of the author.