Staff Reporter: 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, ensuring inflation control, financial sector stability, and good governance in the banking sector, free from corporate influence.

In a statement issued today, TIB Executive Director Dr. Iftekharuzzaman said, “The newly appointed 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. In addition, he has played significant roles as part of influential business lobbies, including the readymade garment sector, the real estate sector, ATAB, and the Dhaka Chamber. The question is whether the Governor appointed in haste will be able to fulfil public expectations of restoring the banking sector that fell into disarray during the authoritarian kleptocratic regime, remaining free from the influence of business lobbies, borrowers, and loan defaulters. Particularly in a context where nearly 60 percent of Members of Parliament and 62 percent of the Cabinet members are primarily businesspersons, and around 50 percent of MPs are 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? Through this appointment, what message is being conveyed nationally and internationally? We urge the government to reflect on these questions,” he added.

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 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. 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.

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. Doubts have also arisen regarding the implementation of measures and initiatives already undertaken to safeguard and ensure good governance in the banking sector. Rising above business interests, will the new Governor be able to take independent and impartial decisions to control inflation, maintain financial sector stability, and take punitive action against weak banks that protect personal interests?The mass uprising of 2024 generated public expectations for positive change across sectors, including the establishment of an independent central bank. In this context, Dr. Zaman questioned 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.