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Why so much uproar over appointment of new governor?

At the farewell reception for the Federal Reserve Chairman Alan Greenspan in 2006, then-President George Bush jokingly remarked that Greenspan had achieved popularity equivalent to that of a 'rockstar'. Greenspan served as the Federal Reserve Chairman from 1987 to 2006. Recently, even before the...

en.prothomalo.com

Why so much uproar over appointment of new governor?

Birupaksha Paul
Updated: 01 Mar 2026, 08: 48

At the farewell reception for the Federal Reserve Chairman Alan Greenspan in 2006, then-President George Bush jokingly remarked that Greenspan had achieved popularity equivalent to that of a 'rockstar'. Greenspan served as the Federal Reserve Chairman from 1987 to 2006. Recently, even before the new Governor of Bangladesh Bank takes office, he has come under discussion much like a rockstar. Greenspan earned his fame after 18 years of independent and insightful policy-making service. On the other hand, Bangladesh’s new Governor has become the subject of widespread discussion even before starting his work.

The date was 25 February. The day began like any other but ended as a memorable day in the history of the central bank. The distinguished economist, Governor Ahsan H Mansur’s appointment was abruptly canceled by the Finance Ministry, which on the same day appointed the relatively unknown Md Mostaqur Rahman as the new Governor. Rahman is academically an accountant and professionally a garment industry businessman. f we go by the identities of accountant and businessperson, there would be at least a thousand people in the country who are no less prominent or accomplished in terms of exposure and outreach than the new governor. However, Rahman's prominent identity surpasses all this, as he was an active member of BNP's election steering committee. People are saying that this identity helped him gain the governorship.


BNP came to power with a landslide victory. It’s not surprising that this ruling party would look for BNP-leaning individuals for appointments like the Governor. But the question arises, is there really such a scarcity of economists within this party? Do they not have any banking, finance, or public policy experts? If BNP were a nascent party, it could be understandable. Why this lack of discernment in a party almost half a century old? In fact, this is not a lack of talent. It is a well-thought-out decision by the ruling party. However, while this action of the government may be cunning, it lacks wisdom. This is BNP’s first surrender to the conventional economic culture. In the evening elections of 2018, the Awami League had similarly appointed a businessman as their Finance Minister, but the result wasn't favourable. Coincidentally, he was also an adept accountant.

In Bangladesh, any criticism of a position holder is taken personally, which reflects a poverty of thought. Once an individual occupies an important state position, they cease to be just an individual. Each of their actions becomes open to criticism. If the new Governor takes this in stride, the discussion might serve as a learning experience for him. He is a businessman, which provides him extra experience. Most governors lack business experience. However, he is also a defaulter of Tk 860 million, although he regularised it by partially repaying it before the elections last December.

Many parliament members similarly ‘regularised’ themselves during the ‘become a saint season’ before elections. Was the chessboard for the Governor's appointment set up in advance? If so, there’s nothing fundamentally wrong with that. But whether or not it demonstrates financial foresight is the question. About five hundred years ago, Vaishnav saint Sri Chaitanya said, "One teaches others through one’s practice." If one doesn’t practice what one preaches, it's hard to offer sound advice, let alone make policy.

How the new Governor takes a firm stand against loan defaults is a matter of concern for him as much as for the BNP government. The economy cannot advance with a burden of 40 per cent non-performing loans. This is Asia's highest number and one of the most dangerous levels in the world, which can collapse the entire banking system at any moment. Without declaring a proper war against this, BNP will eventually turn into another sect of mystics. Let’s not talk about the remaining consequences at such an auspicious moment.

Economist and legal expert Kevin Warsh is probably going to be the next Fed Chair of the United States. He will replace Jerome Powell by mid-May. Wide discussions have already started around this matter.

Even a detailed analysis of the Governor’s personal character isn’t omitted. Despite holding degrees from universities like Stanford and Harvard, so much debate surrounding Warsh is ongoing in the media. There will be intense debates in Congress. Only after passing the litmus test in Congress can the President appoint him as the head of the central bank.

In every developed country, why is such meticulous scrutiny done in the election of a governor? Because the country's future depends on the Governor’s integrity, firmness, research, wisdom, and vision. For a crucial state position like this, there was no need for any sudden surprise. After the Parliament was formed, there could have been discussions about several potential candidates. Until then, Governor Mansur could have continued his duties.

Almost all departments of the past Yunus government showed incompetence in their activities. Only under Governor Mansur’s leadership, some substantial work was being done in the central bank. This is not a farewell consolation for Mansur. I've mentioned this in almost every writing or discussion platform. The way he was dismissed without honour doesn’t bode well for the dawn of the government. In Rabindranath’s words, "The king honours all and receives honor in return," the government forgot this saying.

If someone is selected through scrutiny and debate in Parliament, and later the Governor fails to show good work, then the full responsibility does not fall on the government. This reduces the chance of errors. The position of ‘Governor’ isn’t one for ‘experiments.’ It’s akin to launching a rocket. Security on all sides must be scientifically assured. The BNP government failed to show such prudence in the appointment of a Governor.

Let’s assume that the Accountant and Businessman Governor is the most qualified candidate to tackle the current crisis. The marriage happened in a somewhat feudal style, even before convincing or explaining it to the stakeholders. The groom and bride’s opinions hold no value. This action was taken by a party that we believe will introduce a bicameral legislature in Bangladesh for the first time. Meaning, it will create opportunities for more discussions and debates. But there was no proof of it in the choice of Governor. The pledge to build a ‘meritocratic Bangladesh’ as voiced in the election manifesto wasn’t reflected in the Governor’s selection. There’s no sign of love for intellect in the sudden expulsion of a wise monetarist economist who worked at institutions like the IMF. The touch of courtesy is absent.


Mansur was a strong regulator. He didn’t sit on the chair with the responsibility of any group interest. Maybe he lacked shrewdness in HR administration, or perhaps he wasn’t crafty in that area. But that’s not an essential quality for a Governor. The reform work he took on and laboured day and night at undoubtedly panicked many oligarchs. Possibly, falling prey to the united conspiracy of this group, Governor Mansur sacrificed himself like a hero. Even then, time could have been given. The deputies could've run the bank for some days. Instead, the emergence of a new Governor within just a few hours has surely stirred the financial world. This doesn’t favour stability.

Dr. Birupaksha Paul is a professor of Economics at the State University of New York at Cortland.​

 

[Saif]

Sammilito Islami Bank merger to continue: Governor

Bangladesh Bank Governor Md. Mustaqur Rahman on Tuesday affirmed that the operations of Sammilito Islami Bank, formed through the merger of five Shariah-based banks, will continue as planned. The Governor also sent a stern warning to those involved in the misappropriation of funds from these banks

thefinancialexpress.com.bd

Sammilito Islami Bank merger to continue: Governor

UNB
Published :
Mar 03, 2026 21:11
Updated :
Mar 03, 2026 21:11
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Bangladesh Bank Governor Md. Mustaqur Rahman on Tuesday affirmed that the operations of Sammilito Islami Bank, formed through the merger of five Shariah-based banks, will continue as planned.

The Governor also sent a stern warning to those involved in the misappropriation of funds from these banks during the tenure of the fallen Awami League government, stating that the government will ensure they face legal punishment.

Governor Rahman shared these directives during a meeting with the newly appointed administrators of the five banks and senior officials of the central bank at his office on Tuesday, according to meeting sources.

During the meeting, the Governor instructed officials to expedite the appointment of a Managing Director for Sammilito Islami Bank. He confirmed that the current Board of Directors will remain in place to oversee the transition.

In a move to stabilize the economy, the Governor emphasized the revival of industrial units under the jurisdiction of these five banks.

“Initiatives must be taken to restart factories that are currently non-functional. We must ensure these units return to production,” he reportedly said, adding that the central bank would assist in clearing any outstanding foreign dues of these institutions to facilitate operations.

Officials present at the meeting noted that the Governor’s clear stance has dispelled the prevailing confusion and rumors regarding the future of the merger.

This follows a similar message delivered by the Governor on Sunday during a meeting with representatives from the Association of Bankers, Bangladesh (ABB). In that meeting, he asserted that ongoing reforms in the banking sector would continue unabated and that he would not succumb to any political pressure.

Furthermore, in alignment with the current government’s electoral pledge to create 10 million jobs within the first 18 months, the Governor pledged policy support to revive factories that were shut down due to recent political shifts.

Following the fall of the Awami League government, the interim administration merged five struggling banks—EXIM, Social Islami, First Security Islami, Union, and Global Islami Bank—to form Sammilito Islami Bank.

The new entity began its journey with a total capital of Tk 35,000 crore. Of this, the government provided Tk 20,000 crore, while the remaining Tk 15,000 crore will be sourced from a dedicated fund for depositors.

Additionally, an initiative is underway to pay out Tk 12,000 crore from the Deposit Insurance Fund to approximately 78 lakh depositors, with each receiving up to Tk 2 lakh.​

 

[Saif]

Why did Ahsan H Mansur become the ‘enemy’ of bank customers?

The way Bangladesh Bank Governor Ahsan H Mansur was removed has drawn intense criticism. There is also debate, both for and against, about what he did or did not do to address the crisis and uncertainty in the economy and banking sector, that is, about his successes and failures. While...

en.prothomalo.com

Why did Ahsan H Mansur become the ‘enemy’ of bank customers?
In total, these seven banks had withdrawn nearly Tk 296 billion (29,597 crore) from Bangladesh Bank in violation of regulations. Two additional banks also lacked sufficient CRR. Yet each of these banks was supposed to maintain at least 4 per cent of total deposits in its account. In effect, after looting their own banks, the insiders began draining Bangladesh Bank as well.

Chandan Aziz
Published: 04 Mar 2026, 09: 51

Ahsan H Mansur File photo

The way Bangladesh Bank Governor Ahsan H Mansur was removed has drawn intense criticism. There is also debate, both for and against, about what he did or did not do to address the crisis and uncertainty in the economy and banking sector, that is, about his successes and failures.

While economists have largely praised him, many ordinary bank customers have criticised him. Their major complaint is that because of him they were unable to withdraw their deposits from banks. According to them, Ahsan H Mansur “blocked” their money. What is the reality? Let us take a look.

Under Bangladeshi law, conventional banks must deposit 17 per cent of their total deposits with Bangladesh Bank (13 per cent in securities and 4 per cent in cash). Islamic banks must maintain 9.5 per cent (5.5 per cent in securities and 4 per cent in cash). Excluding the security portion, each bank must keep 4 per cent of its total deposits in its principal account with Bangladesh Bank. This is formally known as the CRR (Cash Reserve Ratio).

After the mass uprising of 2024, Ahsan H Mansur took charge as governor. He found that many banks in Bangladesh were effectively insolvent and lacked the capacity to repay deposit liabilities. In several cases, the required CRR funds were not maintained in their principal accounts; instead, those accounts showed negative balances.

Consider the situation in a few banks: First Security Islami Bank Plc had a shortfall of Tk 106.11 billion (10,611 crore), Islami Bank Bangladesh Plc had a shortfall of Tk 71.28 billion (7,128 crore), Social Islami Bank Plc had Tk 44.81 billion (4,481 crore), National Bank Plc had Tk 34.79 billion (3,479 crore), union Bank Plc had Tk 27.94 billion (2,794 crore), Global Islami Bank Plc had Tk 7.12 billion (712 crore), and Bangladesh Commerce Bank Plc had Tk 3.92 billion (392 crore) in deficit.

In total, these seven banks had withdrawn nearly Tk 296 billion (29,597 crore) from Bangladesh Bank in violation of regulations. Two additional banks also lacked sufficient CRR. Yet each of these banks was supposed to maintain at least 4 per cent of total deposits in its account. In effect, after looting their own banks, the insiders began draining Bangladesh Bank as well.

What could the new governor do?

The governor of Bangladesh Bank is the custodian of the country’s economy. If you had taken charge and seen such a situation, what would you have done? Would you have allowed these banks to withdraw even more money the next morning?

If the banks failed to get more funds, they would be unable to repay depositors, leading to panic and a nationwide loss of confidence in the banking system. But giving them more money could have deepened the crisis.

In effect, after looting their own banks, the insiders began draining Bangladesh Bank as well.

Bangladesh Bank would have had to print hundreds of thousands of crores more. Inflation would have surged. The taka would have depreciated further against the dollar. Bangladesh’s credit rating abroad would have fallen. Foreign banks might have cut credit lines to Bangladeshi banks. On the other hand, stopping liquidity support would damage public confidence.

Ahsan H Mansur chose to stop the funds.

On 13 August, 2024, the unethical advantages enjoyed by seven banks were halted. This created serious difficulties. Hundreds of thousands of depositors suffered unprecedented hardship. But the broader economy was saved from an even greater disaster.

Later, however, the governor could not fully stick to the decision of withholding funds. Under pressure from various quarters and fearing public anger, he had to gradually provide liquidity support to these ailing banks. In my view, this was not ideal. What should have been done? Upon taking office, these banks should have been declared closed. After six months, they could have been merged with a state-owned bank and deposit repayments resumed. Since deposits in state-owned banks are considered safer, there would have been less pressure to withdraw funds.

He could not do this because the interim government was the weakest in Bangladesh’s history, lacking political authority and full coordination.
What else was needed? Punitive action against the corrupt directors of these seven banks. Confiscation of all their movable and immovable assets. Imprisonment of major loan defaulters. Action against central bank officials who approved the illegal CRR withdrawals.

The weak government could do none of this. Of course, these tasks were not easy—but they were not impossible either.

Was exposing hidden bad loans good or bad?

Despite limited capacity, Ahsan H Mansur achieved much. He reduced deficits in banks’ principal accounts, halted ongoing looting, reduced the government’s domestic borrowing, serviced foreign debt, stabilised the exchange rate, boosted remittance inflows, increased reserves, secured IMF disbursements, and initiated reforms in the banking sector.

His most significant step was forcing banks to disclose hidden bad loans. Total non-performing loans rose from Tk 3 trillion to Tk 7 trillion. Many call this his failure. I call it his greatest success.

A report published in Prothom Alo on 25 December, 2025 revealed alarming default rates: union Bank 96.64 per cent, First Security Islami Bank 96.20 per cent, Global Islami Bank 95.70 per cent, Padma Bank 94.17 per cent, ICB Islami Bank 91.38 per cent, AB Bank 84.04 per cent, National Bank 75.46 per cent, Janata Bank 73.18 per cent, Bangladesh Commerce Bank 71.11 per cent, BASIC Bank 70.59 per cent, Social Islami Bank 70.17 per cent, IFIC Bank 60.63 per cent, Islami Bank 58.24 per cent, EXIM Bank 56.86 per cent.

For example, union Bank had disbursed about Tk 270 billion in loans, almost all defaulted, while deposits stood at Tk 240 billion. First Security Islami Bank had disbursed around Tk 600 billion, nearly all defaulted, against Tk 450 billion in deposits. Global Islami Bank disbursed about Tk 130 billion, almost entirely defaulted, with Tk 130 billion in deposits. Much of this money was taken by Saiful Alam. There is virtually no prospect of recovery. Repayment would require taxpayers’ money.

Can you fill a basket case?

After 5 August, the government injected billions of taka into troubled banks in phases. Bangladesh Bank provided these as loans: Tk 55 billion to First Security Islami Bank; Tk 50 billion to EXIM Bank; Tk 40 billion each to Social Islami and National Bank; Tk 20 billion each to Global Islami and union Bank.

None of these banks has the capacity to repay. More funds would be needed over time. These banks resemble black holes, generating losses. Public confidence has evaporated. Depositors may not withdraw everything immediately, but at the first opportunity, they likely will.

To sustain these banks, the government would have to print nearly all deposit amounts and bear heavy operating costs. You cannot fill a basket case. That is why the governor initiated the merger of five banks.

Why were investors dissatisfied?

The benefits of bank mergers are hard to realise, but without them, conditions would worsen. By dissolving five banks and forming a single state-owned bank, the governor sought to restore confidence. In my view, however, mergers should have preceded liquidity support.

All policies have pros and cons. The governor at least tried. The shares of these banks were listed on stock exchanges, and ordinary investors held them. Trading was suspended during the merger. Of the Tk 58 billion paid-up capital, general investors held shares worth Tk 22 billion in book value.

About 2.2 billion shares were confiscated, angering investors. Perhaps shareholders could have been allotted shares in the new entity. But shareholders are residual claimants; they are paid only after all creditors.

The damage was done by Saiful Alam and other looters. Tough decisions were needed to save the economy. Someone had to do the dirty work.

Looting of leasing companies

Mansur also initiated liquidation of nine looted leasing companies. Before plundering banks, looters practiced on leasing firms. Almost all leasing companies were hollowed out. Liquidation was the best option.

Looters built foreign asset empires from stolen bank funds. Those assets belong to Bangladesh and should be recovered. Repatriating them is extremely difficult, almost impossible. Yet the governor tried, by hiring foreign lawyers, negotiating with foreign governments, and pursuing recovery.

Mansur’s mistake

Successful people are rarely popular. Doing the right thing means upsetting someone. Mansur made many enemies. Did he do everything right? No—he made one major mistake: he spoke too much.

A governor should communicate through a spokesperson and rarely appear directly before media. His frequent statements invited criticism.

Still, I will remember him as successful. That such a governor did not even receive a farewell reception is a regret I will carry for a long time.

* Chandan Aziz is a bank official and writes regularly on the banking sector.​