TIB raises concern over new BB governor appointment

Transparency International Bangladesh (TIB) has expressed concern over whether the newly appointed Bangladesh Bank (BB) governor will be able to perform his duties independently, free from conflicts of interest.

It has also questioned how a readymade garment and real estate entrepreneur, who rescheduled loans for his own company under special consideration, will ensure impartial leadership of the central bank, particularly in maintaining inflation control, financial stability, and good governance in the banking sector.

On Wednesday, the government appointed Md Mostaqur Rahman, a businessman, as the new governor of the central bank for a four-year term, replacing Dr Ahsan H Mansur.

In a statement issued on Thursday, TIB Executive Director Dr Iftekharuzzaman said the newly appointed BB governor’s experience in the banking sector is primarily related to being a borrower, later a loan defaulter, and subsequently benefiting from loan rescheduling under special consideration. 

He also noted the governor’s involvement in influential business platforms, including the readymade garment and real estate sectors, ATAB, and the Dhaka Chamber. 

According to TIB, concerns remain over whether an appointment made in haste can meet public expectations of restoring discipline in a banking sector already weakened during what it described as an authoritarian kleptocratic regime, remaining free from the influence of business lobbies, borrowers, and loan defaulters. 

Iftekharuzzaman pointed out that nearly 60% of Members of Parliament and 62% of Cabinet members are businesspersons, while around half of MPs are reportedly loan defaulters, with outstanding recoverable loans surpassing all previous records. “How risky could the appointment of a loan-defaulting businessperson, with experience of obtaining loan rescheduling under special consideration and benefiting from policy capture in sectors such as the readymade garment industry and REHAB, be for the banking sector?”

He further asked what message this appointment sends both nationally and internationally, urging the government to reflect carefully on the implications.

Iftekharuzzaman stated that 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 further noted, “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, the TIB executive director said, adding that appointing an individual burdened with conflict of interest as the BB governor 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.

Furthermore, 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, Iftekharuzzaman said. 

Doubts have also arisen regarding the implementation of measures and initiatives already undertaken to safeguard and ensure good governance in the banking sector, he said. 

The organisation questioned whether the new BB governor will be able to rise above business interests and take independent decisions to control inflation, maintain financial stability, and take action against weak banks where necessary.

Referring to the public expectations created by the mass uprising of 2024, TIB emphasised the demand for institutional reform, including an independent central bank. In this context, Iftekharuzzamanquestioned to what extent the central bank, under the leadership of the newly appointed Governor, will be able to function independently, beyond partisan and influential business interests, in regulating and supporting the overall banking sector.