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In total, these seven banks had withdrawn nearly Tk 296 billion (29,597 crore) from Bangladesh Bank in violation of regulations.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.
