Prothom Alo: How did the interim government contact you about taking on the role of governor of Bangladesh Bank?
Ahsan H Mansur: Dr. Wahiduddin Mahmud called me and said, "You will receive a proposal; you cannot say 'no' this time like before."
Prothom Alo :
Prothom Alo: What do you mean by 'like before'?
Ahsan Mansur: During Sheikh Hasina's government, I was offered the same position. I declined because I felt there was no environment for working independently at Bangladesh Bank.
Prothom Alo :
Prothom Alo: When was this?
Ahsan Mansur: Before the second term of Fazle Kabir. Since I refused, the Bangladesh Bank Order was amended to extend the age limit for Fazle Kabir.
Prothom Alo :
Prothom Alo: Did the interim government have any specific expectations or conditions for you when appointing you as governor?
Ahsan Mansur: No, there was no discussion before taking on the responsibility. Shortly after assuming the role, I had an introductory meeting with Muhammad Yunus to exchange views on the country's economy; however, he did not give any directives. I told him that I wanted to work independently and hoped to have that opportunity.
Prothom Alo :
Prothom Alo: What was the condition of Bangladesh's economy and banking sector when you took over?
Ahsan Mansur: The situation was worse than I had anticipated from the outside. I had previously questioned various economic data from the government, especially in the banking sector. My understanding was that the actual amount of defaulted loans was at least two and a half times the official figures. I openly stated that true non-performing loans (NPLs) might be 25 to 27 per cent.
However, after taking responsibility, it became clear that the situation was even more dire, with NPLs reaching 35 to 36 per cent. The biggest shock was the outstanding foreign payments, with unpaid letters of credit (LCs) and other international liabilities totaling 350 to 400 million US dollars. As a result, international banks started reducing credit facilities or lines of credit for Bangladeshi banks. Some reduced limits from 10 million to 5 million dollars or even less, while others threatened to stop doing business with Bangladesh altogether.
Prothom Alo: What was your biggest challenge at that time?
Ahsan Mansur: The biggest challenge was stabilising the economy. The economy had been on a downward trend for several years. Exchange rates increased rapidly, inflation was on the rise, and reserves were decreasing. I believed that controlling inflation was not possible without stabilising the dollar market. Therefore, my first priority was to stabilise the exchange rate. It had fluctuated from Tk 82 to Tk 120. Stabilising it was the first challenge.
Prothom Alo :
Prothom Alo: Did you make any promises to the government?
Ahsan Mansur: No, the government neither asked for nor did I make any promises. However, I promised myself to stabilise the dollar exchange rate and prevent further depletion of foreign currency reserves. Restoring normal flows of international trade was also part of my commitment.
Prothom Alo :
Prothom Alo: Anything else?
Ahsan Mansur: Establishing governance in the banking sector was also on the agenda. As part of that, I began restructuring the boards of weaker banks; 14 banks underwent board changes. The new boards were tasked with bringing the banks back to normalcy and were held accountable. Several policy decisions were made quickly, the most important of which was the policy interest rate. I stopped at 10 per cent from 8. 5 to 9 and then from 9 to 9. 5 per cent. This was intended to help control inflation and exchange rates.
Prothom Alo: What couldn't you achieve?
Ahsan Mansur: My goal was to bring inflation down to 7 per cent by June of this year. I wasn't there at that time. Even if I had been, it might not have been possible. Inflation remained around 8 per cent while I was there. There is a slight failure here. However, I managed to stabilise the exchange rate. I had intense debates with the International Monetary Fund regarding the exchange rate. They wanted to disburse the installments if all other conditions were met, and they wanted the exchange rate to be fully market-based, with no central bank intervention. While I wasn't against a market-based exchange rate in principle, I emphasised timing. It was September 2024. The annual World Bank-IMF meeting was in October in Washington, right before the debate. I was concerned that a major shock could occur. I said that leaving the exchange rate to the market in times of panic, outstanding liabilities, and widespread speculation could lead to situations going out of control, potentially reaching 300 to 350 rupees like in Sri Lanka. In Sri Lanka, the rate for each US dollar is still 336 rupees. I also pointed to Pakistan's example, where it's 285 rupees per dollar. Is this what we want? I told the IMF that, at least, I did not want that.
Prothom Alo :
Prothom Alo: Did you observe any glaring institutional opaqueness, weakness, or corruption at Bangladesh Bank that surprised you the most?
Ahsan Mansur: Frankly, compared to other central banks worldwide, officials at Bangladesh Bank are not given the kind of benefits they should receive. Their pay structure is like that of civil servants. This is not the case in India, where Reserve Bank officials' salaries are four to five times higher than general government officials. The same system exists in Pakistan, the UK, the US, and most other countries globally. To attract skilled personnel, you need to provide good salaries. To keep them free from corruption, a competitive salary structure is necessary. We don't have that system here, so often, highly talented individuals are not inclined to join Bangladesh Bank. I wouldn't say there is no corruption; however, I would also say that there are many good officials in Bangladesh Bank. Greater autonomy for Bangladesh Bank could have enabled a better pay structure.
Prothom Alo: Which reform steps taken as governor do you consider the most significant?
Ahsan Mansur: Achieving major structural reforms in such a short time is neither possible nor realistic. We focused on structural reforms, such as legislating the new Deposit Insurance Protection Act, increasing the compensation amount from Tk 100,000 to Tk 200,000. An ordinance was made to merge weaker banks, which later became law. Under this law, the government or Bangladesh Bank can do many things. Five Islamic banks have already merged. Although there was an initiative to reintroduce old owners under section 18 (Ka) of the law, the government has announced it will override this initiative. The announcement is natural. The Bank Company Act ordinance was also made, although it is yet to become law, recommending significant reductions in the power of shareholder entrepreneurs. Drafts for Financial Loan Court ordinances have also been submitted to the government. The Distressed Asset Management Act (DAMA) draft has also been prepared.
Prothom Alo :
Prothom Alo: The DAMA draft was just published on the website. How effective is the DAMA system in other countries?
Ahsan Mansur: They may publish it, but we prepared it. Bureaucracy often delays things. Then Finance Adviser Salehuddin Ahmed agreed to it, albeit slowly. If we can get the Financial Loan Court and DAMA enacted, it will offer substantial solutions to the problem of non-performing loans.
Through DAMA, we wanted to protect assets, encouraging both local and foreign institutions to invest here. Affected people in institutions like BASIC Bank, Jubok, Destiny, etc. , haven't received anything back. They deserve at least some return. DAMA would create an opportunity for recovery.
Prothom Alo: Which was the toughest decision during your tenure? Looking back, is there any decision you would make differently today
Ahsan Mansur: There were many tough decisions. Among them, merging the five Islamic banks was the most important one. We reviewed the issue very cautiously. Our assessment was that no better solution could be offered. However, it certainly comes with risks, the biggest being how the government will manage it and whether it can implement it successfully.
Prothom Alo :
Prothom Alo: What is your assessment of the true picture of non-performing loans? Do the current statistics reflect reality?
Ahsan Mansur: We have revealed the true state as much as we could. There might be minor discrepancies, but no major fundamental changes should occur. Now the government's responsibility is gradually reducing the almost 35 per cent non-performing loans down to 3-4 per cent. This cannot be achieved in one or two years. It will take at least 10 years. For this, deposits must be increased, governance needs to be ensured, Bangladesh Bank should be allowed to work independently, and accountability must be maintained.
Prothom Alo :
Prothom Alo: Is it possible to have a banking system free from political influence in a country like Bangladesh?
Ahsan Mansur: Absolutely possible. Everything depends on the government's goodwill. We worked for about a year and a half. During this time, I never received a call from the Chief Advisor's Office asking me to appoint someone as chairman or give someone a position. All decisions were made by Bangladesh Bank itself. We made mistakes too. For instance, someone was assigned to a position at an Islamic bank, and it later transpired that they were involved in corruption, leading us to remove them. We did not know them personally from day one; their CV looked good. Recommendations for appointments were based on the suggestions of those who proposed their names. Once information surfaced, we changed our decision, as mistakes need to be corrected.
Prothom Alo: What progress was made regarding those involved in previous looting and financial irregularities in terms of accountability
Ahsan Mansur: We had initiated several measures regarding this. A task force was formed through the government. Every two to three months, the task force's progress would be presented to the advisory council. Our target was to identify and recover assets that had been moved domestically and internationally, using legal steps when needed.
We operated in two ways. Through the task force, 12 joint investigation teams (JITs) were formed. We provided these teams with 12 offices, furniture, necessary infrastructure—everything provided by Bangladesh Bank. Every JIT was tasked with investigating specific individuals or family-based cases, gathering, and preserving all documents, and then presenting them to the courts domestically or internationally. This entire structure was built that way. The World Bank, the US government, and the British government assisted us in this effort.
Prothom Alo :
Prothom Alo: Is this process still ongoing now?
Ahsan Mansur: It continued while I was still in charge. A British consultant was stationed in Dhaka for a year, offering hands-on training on how to conduct investigations, process documents, store them, and maintain confidentiality, as leaks could render documents inadmissible in foreign courts. Hence, significant caution was exercised in these matters. Simultaneously, we had 13 international legal firms enter into confidentiality agreements with the banks so they could pursue civil cases abroad. That process was ongoing too. We laid much of the groundwork. The government will need to carry this process forward, with ongoing coordination between Bangladesh Bank and the banks involved in the litigation abroad.
We structured it so that if they successfully recovered the money, they would retain 15 or 20 per cent, while returning the remaining 80 or 85 per cent to us. It would not cost us anything. They would take the evidence we provided to the courts. If they recouped 100 dollars, they would retain 15 dollars and return the remainder to the banks.
Prothom Alo :
Prothom Alo: When should the policy rate or high-interest rates used to control inflation be reduced?
Ahsan Mansur: When I set the policy rate at 10 per cent, I mentioned through your platform that we would start adjusting the policy rate when the difference between inflation and the policy rate exceeded 2 per cent. Although we got close to 2. 5 per cent, we weren't fully there. While I was in charge, the gap was slightly over 1. 5 per cent. If inflation fell below 8 per cent, we would have definitely reduced the policy rate. Our aim was to keep a gap of approximately 2 per cent between inflation and the policy rate. That was our guiding principle. If inflation went down to about 5 per cent, the policy rate could be lowered to 7 per cent. There’s no problem with that. But inflation has to be reduced first. There was pressure on me, even from the government at that time, asking if something could be done about the policy rate. My response was ‘no, ’ because until there was a 2 per cent gap, I wouldn’t feel comfortable.
Prothom Alo :
Prothom Alo: Is there still any reason for public concern regarding reserves, the dollar market, or exchange rates?
Ahsan Mansur: Look, none of these can ever be taken for granted. For a country like Bangladesh, foreign currency markets and macroeconomic stability are always a challenge. If anyone thinks the exchange rate is stable and won't change, that would be the biggest mistake. The exchange rate is still somewhat under pressure, which is why I hear that Bangladesh Bank has set it again. I don't think that is desirable. The exchange rate should be allowed adjustment as needed, but it should happen smoothly and gradually. We stabilised the dollar exchange rate between Tk 120 and Tk 122. At that time, India's dollar exchange rate was at 82 rupees. It had reached 98 rupees before my tenure ended. They adjusted it slowly. We should consider what our neighbours and competitors are doing.
Prothom Alo :
Prothom Alo: What impediments are there to bringing back laundered money?
Ahsan Mansur: They are more challenges than impediments. We were confronting challenges. We maintained high-level contacts with foreigners. I visited Singapore and the United Arab Emirates. I had discussions with their governments. I talked with the US Treasury Department. They were cooperative. In simple terms, efforts must be continuous. This is not a one- or two-year case. Aren’t we still pursuing the reserve theft case? These cases will require going abroad.
Prothom Alo :
Prothom Alo: Following the fall of the Sheikh Hasina government, how well utilised were the opportunities for financial sector reforms created after that?
Ahsan Mansur: We laid the roadmap, and achieving many things would be possible if those are followed. However, new crises should not arise, as happened with the Islamic banks, affecting everyone. I hope S Alam won't make a return. People will not allow S Alam to return.
Prothom Alo: Does the central bank have independence? What has been your experience? Did you feel any pressure?
Ahsan Mansur: No, but there was a debate regarding the policy rate. Wahiduddin Mahmud suggested that the policy rate should be reduced from 10 per cent. My stance was that reducing it now would not be right. We needed to wait a few more months. Later, they accepted my reasoning.
Prothom Alo :
Prothom Alo: Why did you want ministerial rank for the governor?
Ahsan Mansur: It''s common in almost all countries worldwide.
Prothom Alo :
Prothom Alo:No, it''s not present in many countries.
Ahsan Mansur: It exists in one form or another in every country. However, I didn''t want it for myself; I wanted it for the position. I still believe the governor''s position should be above that of the ministers.
Prothom Alo :
Prothom Alo: What benefit will this bring?
Ahsan Mansur: How many ministers can you name? In Bangladesh, there have been nearly a thousand ministers over 55 years. How many governors have there been? Fourteen. You can count them on your fingers and name them. So, who holds a higher position? What good is a protocol? The important thing is to accord the governor due respect and ensure the governor remains independent.
Prothom Alo :
Prothom Alo: The position of governor is prestigious on its own, so why seek further recognition?
Ahsan Mansur: In our Rules of Business, the governor is placed at the level of a secretary, which is completely unacceptable. When the chair is set, he has to sit at the back, which is undesirable. Why should the governor sit at the back in the cabinet? Other governors have also mentioned this. It''s disgraceful. They didn''t openly say it; I did. I told Salehuddin Ahmed to implement it after my time, but still do it.
Prothom Alo :
Prothom Alo:What are the three major challenges in the current economy?
Ahsan Mansur: First, politics and the economy are closely intertwined. If we can''t set the politics right, the economy won''t stabilize. The pact of July cannot be ignored. It exists and will continue to exist. It must be implemented.
What is expected from July? A bicameral parliament, proportional representation, two terms for the government, and a caretaker government. We need these; without them, political tension will arise. It is already happening, and it will intensify. Resolving this beforehand will be good for the government and the country.
We want the democratic process to progress smoothly. If democracy suffers, the economy will be adversely affected. Second, whatever needs to be done to restore discipline in the banking sector must be done. Implementation of laws, establishment of good governance, and autonomy for the Bangladesh Bank are essential. The financial institutions division in the Ministry of Finance should be abolished as per the government''s promise.
Prothom Alo: During your tenure, no steps were taken to abolish the financial institutions division.
Ahsan Mansur: This is Salehuddin Ahmed''s failure. Current Finance Minister Amir Khosru Mahmud Chowdhury has repeatedly said that if BNP comes to power, they will do it. It is likely in BNP’s election manifesto as well. Dual governance is detrimental to the financial sector.
In all countries worldwide, one institution governs the banking sector. Here, dual governance is ongoing. This must be stopped. Moreover, the same law applies to both state-owned and privately-owned banks in all countries.
Prothom Alo :
Prothom Alo: What is the third challenge?
Ahsan Mansur: The revenue management needs to be strengthened. There is a terrible weakness here. The task is difficult. If revenue collection were successful, a budget of 15 trillion taka could have been made. Revenue is not coming in, but expenditure is increasing. There is no discussion about state-owned enterprises. There is no discussion on administrative reform. Salaries are increasing by over 1trillion taka, but what will the citizens gain in return? There is no discussion about how people will receive better services. The size of the government needs to be reduced. There is no need for so many ministries. Hundreds of state-owned enterprises are incurring losses of about 400 billion taka annually. These need to be halted.
Prothom Alo :
Prothom Alo: It’s been two years since the mass uprising. How much has changed in the banking sector in the two years since the Sheikh Hasina government left it?
Ahsan Mansur: In those two years, we were in charge for about one and a half years. Diagnosing the issues took up most of that time. A lot of time was spent drafting seven to eight laws. We identified the solutions. Now implementation is needed. If done, good results will be seen in four to five years.
Prothom Alo: Some officers at Bangladesh Bank were protesting against you. Their complaint was, "We wanted autonomy, but received autocracy. " Was any of your decisions or leadership style responsible for that?
Ahsan Mansur: This was orchestrated by the elected representatives of the Bangladesh Bank Staff Association during the opportunity of a government change. Almost all of them are followers of the previous government. Still are. I didn’t break that cycle, but I did want to implement some reforms. There have been many unnecessary promotions here.
Many positions have been increased at the top level. In the central bank of India, there are 14 executive directors, while Bangladesh Bank has 43. India’s banking sector is more than ten times larger than ours. Promotions were given liberally, turning anyone into an executive director.
But this is a very high rank, equivalent to a secretary''s level. Here, 99 per cent of the staff are rated as ''outstanding. '' Everyone is outstanding, but whether they work or not, there is no accountability. This means there is a problem with the evaluation process.
Prothom Alo :
Prothom Alo: What risks do you see for the current government?
Ahsan Mansur: The current government is finding its back against the wall. The next government will also find itself in a similar position because the government''s budget management is not good. The ability to spend independently is diminishing. Yet, not a single penny was printed and given to the government while I was there. What was printed was to gather liquidity and prevent the banking sector from collapsing. There was no alternative to this at the time. Without it, about 15 banks might have faced problems.
Prothom Alo :
Prothom Alo:Do you see any prospects for Bangladesh?
Ahsan Mansur: There are certainly prospects. However, to achieve them, we need to work with a good vision and mission. We hoped at the beginning of the Awami League government that they would do something significant and take the country forward. They didn’t do that; instead, went in the opposite direction.
We are also hoping for the current government. They should learn from the Awami League government’s mistakes and genuinely implement good reforms. They should create a situation where in five years, people spontaneously want to vote them back into power. We don''t want the government to fail; we want success. We criticise because government failures cause us distress.
Prothom Alo :
Prothom Alo: A week after the BNP government took office, we heard on the news that you were no longer the governor. How did you react at that moment? Did you have any prior indication from the government?
Ahsan Mansur: No, there was no indication. Just two days earlier, I had a two-and-a-half-hour conversation with the finance minister on various issues. As I left, I told him, “Manage the budget, and leave the financial sector to me. ” He could have mentioned if there was any problem at the top level.
Prothom Alo :
Prothom Alo: It might be the case that he wasn’t aware of the decisions from the top level.
Ahsan Mansur: I don’t know about that. I don''t want to say anything negative. However, what happened didn’t affect me personally. In that time, I was able to achieve a lot. I stabilised the macro-economy. Brought the reserves from $20 to $35 billion. Stabilised the exchange rate as well. Reduced inflation significantly. If the banking sector reforms we left behind are implemented by the government, they will gain popularity in the next five to seven years.