[🇧🇩] Banking System in Bangladesh

[Saif]

India reviewing positively Bangladesh request for additional diesel supply

India is positively considering a request from Bangladesh for additional diesel as Dhaka seeks to enhance its fuel reserves amid ongoing energy-supply concerns caused by Gulf Armageddon. Indian High Commissioner in Bangladesh Pranay Verma told The Financial Express on Monday that New Del

thefinancialexpress.com.bd

Bangladesh Bank eases share transfers, profit repatriation for foreign investors

UNB
Published :
Mar 09, 2026 18:56
Updated :
Mar 09, 2026 18:56

In a major move to boost investor confidence, Bangladesh Bank has simplified the process for foreign investors to transfer shares and repatriate sale proceeds from non-listed public and private limited companies.

The central bank issued a comprehensive master circular (EID Circular No. 01), consolidating and updating regulations from 2018 and 2020 to create a more predictable, efficient, and transparent exit mechanism for non-resident investors.

Prashanta Kumar Mondal, Public Relations Officer of the Bangladesh Investment Development Authority (BIDA), shared the details in a press release on Monday.

Under the new guidelines, Authorized Dealer (AD) banks have been granted significantly more power to process transactions without seeking prior approval from the central bank.

Higher Transaction Limits: AD banks can now process share transfers and repatriations up to Tk 100 crore following prescribed valuation methods.

Joint Declarations: For transactions up to Tk 1 crore, transfers can be completed based on a joint declaration by the buyer and seller, bypassing the need for independent valuation.

Fixed Timelines: Once documentation is complete, share transfers must be finalized within 45 days, and the repatriation of sale proceeds must be processed within five working days.

Institutional Oversight: Every AD bank is required to form an internal committee led by senior management to review valuation and repatriation applications.

The reform package was finalized on November 19 last year by a high-level Capital Repatriation Committee, led by BIDA Executive Member Nahian Rahman Rochi and supported by Bangladesh Bank.

BIDA Executive Chairman Chowdhury Ashik Mahmud Bin Harun emphasized that a healthy environment for Foreign Direct Investment (FDI) relies on investors feeling confident at every stage of their journey—including the exit.

“By reducing approval complexities, allowing easier repatriation of sale proceeds, and simplifying valuation and documentation, Bangladesh is moving toward that goal,” said the BIDA chief.

“These initiatives are the foundation of a reliable environment for foreign investment,” he said.​

 

[Saif]

Architecture of credible independence

A statute can proclaim independence, but it cannot manufacture judgment, restraint, or credibility. Legal autonomy may be written into law, yet its real authority emerges only through practice. Legal frameworks provide structure; culture provides strength. Without structure, institutions drift. Wit

thefinancialexpress.com.bd

Architecture of credible independence

Shah Md Ahsan Habib

Published :
Mar 10, 2026 23:21
Updated :
Mar 10, 2026 23:21

A statute can proclaim independence, but it cannot manufacture judgment, restraint, or credibility. Legal autonomy may be written into law, yet its real authority emerges only through practice. Legal frameworks provide structure; culture provides strength. Without structure, institutions drift. Without culture, they weaken from within. Autonomy is therefore not a decorative principle to be admired in constitutional text. It is a working condition for effectiveness.

Independence improves the quality of decisions because it protects them from arbitrary pressure. By contrast, excessive interference multiplies uncertainty. When neutrality is compromised, trust does not take root. This principle applies across public administration, economic management, financial supervision, education, healthcare, and regulatory systems. Institutions that operate without undue pressure maintain policy steadiness. They resist the pull of short-term popularity. They prioritise long-term objectives over temporary applause. They shield decision-making from personal and situational influence. In this sense, independence is not a privilege granted for prestige. It is the infrastructure that allows competence to function.

Effective governance, however, requires more than formal independence. It depends on a balance between competence and authority. Decision-making power should rest where knowledge and experience are concentrated. Authority should follow expertise. When rules are applied consistently, confidence grows. When influence is irrational or politically motivated, policy stability deteriorates. Autonomous institutions are better positioned to preserve continuity, and continuity fosters investment. Investment strengthens growth. Confidence lowers transaction costs, and lower transaction costs improve coordination across the economy. Economic and institutional theory both reinforce this logic. Political interference distorts incentives. Inefficient oversight increases systemic risk. By contrast, well-organized institutions reduce uncertainty. When authority aligns with competence, outcomes improve.

Autonomy, therefore, does not mean absence of control. It means rational distribution of authority. Without such distribution, institutions become reactive rather than strategic. They respond to pressure instead of pursuing coherent long-term plans. As a result, long-term strategy loses clarity and policy credibility weakens.

The autonomy of a central bank illustrates this dynamic clearly. When monetary policy bends to short-term political pressure, inflation control becomes fragile. When interest rates are shaped by popularity rather than prudence, financial stability is endangered. Central bank independence is not a procedural detail. It is a structural requirement for macroeconomic stability. Inflation expectations are managed through credibility. Credibility is sustained through consistency. Consistency depends on institutional autonomy.

Yet independence cannot be absolute. It must operate within clearly defined objectives, transparent communication, and firm accountability. There is a significant difference between declaring independence and exercising it responsibly. Writing autonomy into law does not ensure its effectiveness. In practice, perspective, professional conduct, and ethical firmness matter more than legal wording alone. Legal recognition establishes a foundation. Real confidence grows from consistent decisions, transparent explanations, and responsible use of authority. Trust from government, markets, and stakeholders is not secured through proclamation. It is earned through sustained professional standards.

There is no automatic relationship between legal recognition and effective autonomy. A charter defines boundaries, but it does not create character. Paper independence does not guarantee operational independence. Outcomes depend on people and institutional culture. Institutions do not act in abstraction. Individuals interpret rules, exercise authority, and carry responsibility. The quality of autonomy therefore reflects the quality of those who implement it.

When independence is understood as responsibility, decision-making becomes cautious and principled. When it is treated as privilege, deviation increases. The same authority can produce discipline or distortion. The difference lies in mindset. This is equally true for central banks. Legal independence alone cannot protect policy credibility if leadership compromises professional integrity. Conversely, even within limited legal frameworks, capable leadership can preserve policy standards and institutional trust.

Autonomy and accountability are not opposing concepts. They reinforce one another. Independence does not imply absence of responsibility. Transparency generates trust because it allows decisions to be understood and evaluated. Review mechanisms create room for improvement. Decisions made without explanation invite suspicion. Opaque processes weaken institutional legitimacy. Accountability does not restrict autonomy; it safeguards it. Clear standards are necessary. Objective evaluation is indispensable. Without these, autonomy becomes unstable and vulnerable to criticism.

In the case of a central bank, regular reporting, parliamentary accountability, and policy clarification are essential components of credibility. Independence without explanation erodes public confidence. Excessive political intervention similarly undermines trust. The central principle is balance.

Institutions can demonstrate excellence even under strict regulatory conditions when their internal culture is strong. Ethical standards must be clear. Leadership must be responsible and restrained. Professional integrity must guide every major decision. Trust develops gradually through consistent behaviour. As credibility strengthens, oversight can become more calibrated and less intrusive. The scope of independence then expands naturally. Autonomy is not effectively achieved through demand alone. It is secured through demonstrated competence and earned trust.

Culture, although intangible, determines outcomes. It shapes behavioural norms and defines institutional identity. A strong culture reinforces accountability. A weak culture renders even the strongest legal authority ineffective. In such circumstances, formal independence loses substantive influence. This reality is especially evident for central banks and regulatory institutions. If policymaking lacks ethical firmness and yields to political convenience, legal autonomy becomes symbolic rather than functional. Conversely, a strong ethical culture can preserve policy stability even within constrained legal environments. The durability of autonomy ultimately rests on culture.

Autonomy also depends on trust-based relationships. Trust grows from consistent conduct. Leadership establishes standards through example rather than rhetoric. An institution cannot suppress initiative internally while demanding independence externally. Internal rigidity undermines external credibility. Trust operates reciprocally. Standards not practiced internally cannot be convincingly required from others.

For a central bank, relationships with markets, government, and citizens are all critical. If internal decision-making lacks transparency, external confidence cannot endure. Self-evaluation is therefore essential. Do participants in the financial sector respect professional boundaries? Is regulatory authority exercised with proportional restraint? Is power applied fairly and consistently? These are not abstract ethical concerns. They are foundational conditions for institutional sustainability.

Autonomy develops incrementally. It is built through sustained performance. Three pillars support it: a strong legal framework, effective accountability, and a responsible culture. If any pillar weakens, balance collapses. Without structure, disorder increases. Without accountability, trust declines. Without culture, structure becomes inert. Independence and oversight are not contradictory. Reasonable oversight strengthens autonomy by reinforcing legitimacy. Excessive control stifles innovation. Total absence of control undermines discipline. Stability requires equilibrium. Central bank independence is a precise illustration of this equilibrium. Policy autonomy must coexist with democratic accountability.

Autonomy is not an objective in itself. It is a mechanism for improving decision quality. It signals recognition of competence and reinforces trust. Claims to independence must be supported by demonstrated capability. Undisciplined freedom creates risk. Responsible freedom generates stability. Culture evolves over time, and leadership plays a decisive role in shaping it. Example carries more weight than rhetoric. Transparency functions as a quiet source of strength. Evidence-based decisions reduce controversy. Clear explanations reduce suspicion. Admission of mistakes enhances credibility. These practices transform autonomy from a legal concept into an operational reality.

The ultimate question is therefore normative. Is the goal independence alone, or responsible independence? Is the objective authority, or trust? Is the priority control, or capability? Institutions derive strength from internal coherence. Law provides architecture. Culture supplies vitality. Accountability ensures endurance. Only when these elements operate together does autonomy become effective.

Under the new leadership at the central bank, this balance becomes especially significant. The responsibility extends beyond defending formal independence. It includes strengthening the professional culture that sustains credibility. Autonomy must be exercised with discipline and transparency. Accountability must be embraced as institutional protection rather than perceived constraint. At the same time, closer coordination with fiscal authority is essential to enhance macroeconomic efficiency. Monetary and fiscal policies influence the same economic landscape. Clear communication, mutual respect for mandates, and structured cooperation can reduce policy conflict and strengthen overall stability. Effective coordination, while preserving institutional independence, will increase the efficiency of central banking under the new governor and reinforce long-term economic confidence.

Dr. Shah Md Ahsan Habib, Professor, Bangladesh Institute of Bank Management, and Chairman, DNet Bangladesh.​