Nowhere in the world have so many banks been looted together

I came up with outline for controlling inflation from the very first day of taking charge as the governor. I adopted different strategies as well. There are two sides to inflation- one is related to demand, the other to supply. From the demand point of view, a contractionary monetary policy has been introduced. The policy rate has been increased from 8.5 per cent to 10 per cent. The interest rate on bank loans did not increase any further after I took charge. However, it’s true that our inflation rate is even higher than the policy rate. That is not the case in the European Union countries or in the developed countries. Even in India, the policy rate is higher than that of inflation. In India there’s an inflation rate of about 4 per cent, which is slightly higher than the target level of Reserve Bank of India (RBI).

All I can say at the moment is that the steps taken by Bangladesh Bank to control inflation are working. There has been huge import of Ramadan essentials. I’m confident that inflation will definitely come down. Once this rate drops below 7 per cent, we will gradually decrease the policy rate as well. The interest rate on treasury bills and bonds has already dropped by 1.5 per cent. We must understand that depreciation of the currency is also to be blamed inflation. The good news is that both the current account and the capital account are in surplus now. The transaction balance is also going strong. There was a pressure of dollar supply during the Hajj season, but all those dues have been repaid as well. The reserve and the remittance flow are in a good shape. So, even if the International Monetary Fund (IMF) does not provide anything now, it won’t matter.

I don’t believe in market monitoring. There’s subsidy here. The duty on import of daily essentials has been revoked almost completely. It needs to be monitored that there’s no extortion on the highways. It has been found in a survey that the middlemen do not make that much of a profit. The whole matter depends on demand and supply actually. That’s why I don’t think anyone would be able to pull off a stunt in the market.

What can I say! The S Alam Group has taken away almost Tk 1,250 billion (Tk 1.25 lakh crore) from the banking sector. Other conglomerates including Beximco have also withdrawn vast amounts of money in the name of loan. I would say, about Tk 2,500 billion (Tk 2.5 lakh crore) has been embezzled from the banking sector on the whole. All this money is politically disbursed loans. If I talk about defaulted loans, the rate of that stands at 18 per cent now which will soar to 35 per cent later. The boards of directors in the banks are also responsible for this kind of plundering. The central bank officials are also to be blamed. Many ask why do the bank officials compromise when there’s unauthorised pressure? They can just quit their jobs. Actually, not everyone can afford to quit their jobs. In many cases, they just compromise then.

Joint investigation teams have been formed. The Anti-Corruption Commission (ACC), Police’s Criminal Investigation Department (CID), NBR’s Central Intelligence Cell (CIC), and Bangladesh Financial Intelligence Unit (BFIU) are all working together. Twelve rooms have been set up at the Bangladesh Bank for the purpose of working on this matter. Our plan is to collect data from ten banks and file a case inside the country against each of the conglomerates as fast as we can. Once the verdict has been passed, assets would be seized. The whole process would be carried out with utmost caution. Then cases would be filed abroad, in countries where the money has been siphoned off to. Then they would have confidence on the verdict passed in Bangladesh.

It will take time. Angola was able to repatriate USD 14 billion in this process. It took them five years. Hopefully, others will take lesson in future, from the way we are proceeding on. However I don’t expect money laundering to stop completely. Why don’t the Bangladeshi citizens living abroad come to the country? They don’t come because they don’t feel safe here. They feel that they are not provided due respect here. There are obstacles in doing business at every step. They are not used to these things. Where does the money go? Money goes to its owner. If the owner is abroad, the money will also follow.

I am working independently indeed. I have taken up 25 to 30 initiatives of reforms. I’m not sure whether I would be able to complete them all before I leave. I have already started working on them nonetheless. Hopefully, it would be possible to complete many of these initiatives within a year. I wouldn’t be here always, nor will the current government be there for long. So, the government has to take initiative to establish the Bangladesh Bank as an independent organisation. For that we would go to the government with a proposal to carry out reforms and strengthen the Bangladesh Bank.

The political influence that was exerted on the Bangladesh Bank should not be repeated in future. Those who will join the post of the governor should be appointed to this post through a selection process so that only the qualified people are appointed. If a Canadian citizen can be the governor of the Bank of England, why can’t we find a qualified person and appoint that person to this post? None of those that are qualified, will be interested in this post themselves, a qualified person must be found through searching.

There has to be institutional reforms to the Bangladesh Bank. There was some lack in leadership here, for which the previous government is responsible. There has been criminlisation of the banking sector. Initiatives will be taken to ensure autonomy for the Bangladesh Bank on the policy-making level. However, no institution can survive if the government does not practice good governance.

The dual governance policy still exists in the country’s banking sector. The government is running the state-owned banks, while the Bangladesh Bank is running the private banks. The ousted government started this by creating the Financial Institutions Division in 2010. It should be abolished right away. The central bank alone would have the authority to run all the banks. If the Financial Institutions Division is retained, they can work on matters like the insurance sector, bond market, pension funds etc. We will approach the government on this issue as well.

This was done in political interests. They were actually appointed to ransack the banks. That’s exactly what they did. Beximco Group alone has taken away Tk 250 billion (Tk 25,000 crore) from the Janata Bank. A company like AnonTex took away Tk 80 to 90 billion (Tk 8,000 to 9,000 crore). What were the chairman, board members, and managing directors doing then?

We are going to enact the bank resolution act and it has almost been finalised. It will be approved within two to three months. An ordinance will be issued. In addition, the quality of the assets of the banks is being verified. The process has started with six banks. In total, the quality of the assets of 24 public and private banks will be verified. Along with that, a forensic examination has also been initiated. This will reveal the trajectory of where the money came from and where it went to. It will be used in the lawsuit. Then we will know the real picture of this sector. Such an initiative has never been taken in Bangladesh before. Nowhere in the world have so many banks been plundered at the same time. However, plundering has stopped at the banks and customers’ confidence has started to return. It may not be possible to keep all the banks running. However, the depositors will get their money back.

My personal opinion is that there’s no need for so many banks in the country. The number of banks needs to be reduced both in the public and private sectors. For that all the procedures including mergers, acquisitions, liquidation, and raising capital would be followed. There are some banks that have given away 87 per cent of their money to S Alam Group alone. What the fate of those banks will be is easily comprehensible. We are expecting to receive foreign funds for capital supply. The Asian Development Bank (ADB) has already agreed to provide USD 1.5 billion (USD 150 crore). The World Bank would also provide money for this. We’ll release bonds and then provide them to the banks. This way, we will try to turn them into banks of international standards. However, it’s a lengthy process. But, we want to start working on two or three banks right this year.

Everything will be done maintaining the interests of the depositors. Our objective is to create a strong foundation for the banking sector within the next four to five years. I am hundred per cent confident about being able to do that. I expect that the media won’t spread any confusion. We will reduce the inflation and the depositors will get their money back as well. Whether the number of banks increases or declines, it won’t make any difference to anyone. I did not take the responsibility to help the banks survive rather my job is to look after the depositors’ interests. The banks can perish, the depositors must survive.

There has been a bit of progress. A lawsuit is running at an American court. The banks in the Philippines released money without following rules. There was a major lacking on their part. We are hopeful about getting justice.

There’s a lot of work to do actually. However, my main task was to restore stability to the macro economy. I have worked on three areas there. There’s already a relief in the transaction balance. We did not sell any dollars from the reserve. We have the reserve to pay off import dues for about four months. The exchange rate remains stable. Meanwhile, the inflation rate has dropped by 1 per cent this month. Hopefully, it will drop down to 7 or 8 per cent by June. If I’m alive till then, I will bring inflation below 5 per cent within next year (June 2026). And, with political support there will be bank resolution both in the public as well as in the private sectors. There will be new investors here.

We are trying to carry out reforms to the Bangladesh Bank as well. We will reform and specify our activities anew. More emphasis will be given on good governance in the banking sector. The problem with Bangladesh is that we can identify the problems but fail to solve them. These issues cannot be resolved by delaying. We need to be strict. For that help is required from the media as well. A fraction of the businessman won’t follow the rules and then say they are being left to die. This tendency is not right. We will approach on the basis of fairness. We have created a taskforce for those who are facing problems. The taskforce will see whether those facing problems have the ability to survive or not. If they have the capability to survive, they will be given the chance to survive even if that takes five to ten years or even if it requires bending the rules. On the other hand, if it seems that they do not have any possibilities even after 20 years there’s no point of keeping them running by pouring in money. We have to be strict about them. We are already working on these areas. Hopefully we’ll be successful. A lot of things have been going around about me as well. But I will keep doing my job, no matter what others say.