The fragility of our banking sector was one of the most damning legacies of the Awami League government. When the interim government took office and promised reforms, many hoped for sweeping changes in the banking sector, starting with the central bank’s full autonomy. But 18 months later, like Governor Ahsan H Mansur himself, we are left disappointed as the finance ministry has opted to pass this agenda on to the next government.
The discussion on BB’s full autonomy did not arise in a vacuum. Both the International Monetary Fund and economists have been pushing for the central bank’s independence. In fact, many argue that the large-scale irregularities and looting that occurred during the AL era could have been mitigated had BB had the authority to take necessary policy decisions without partisan influence.
In response to these calls, the BB governor sent the draft of the Bangladesh Bank Ordinance, 2025, to the finance ministry in October last year, proposing extensive reforms. These included a decrease in the number of government-appointed directors on BB’s board, an increase in the number of independent experts, and elevating the rank of the governor to that of a full-cabinet minister. Besides, the governor would be selected through a search committee and appointed by the president upon the prime minister’s recommendation and the parliament’s approval. Removal of the governor and deputies would also require parliament’s approval. The proposed changes aimed to reduce the finance ministry’s influence over the central bank. This is important because when political clearance is required to decide on interest rate and exchange rate adjustments, “credibility erodes and policy effectiveness diminishes,” argued economist Fahmida Khatun in an article published last year in this daily.
Unfortunately, the draft ordinance sat with the finance ministry for almost four months, and on Sunday (February 8), the finance adviser issued a letter stalling the ordinance’s approval. He argued that such “major amendments” to the Banking Act, 1972, during the interim tenure would not be “realistic.” It is noteworthy that the interim administration had not shied away from approving several major infrastructure projects with long-term implications for the country—decisions that should be taken by an elected parliament.
Sadly, the Bangladesh Bank Ordinance, 2025, is not the only draft law to face stalling. Out of the seven draft laws sent to the finance ministry to transform the banking sector, only two have been approved so far. Even the proposed amendments to the Banking Companies Act, 1991, which could have dismantled the sector’s opaque corporate structure, have not been implemented yet. It is disappointing that the interim government, which is apparently free from the biases of a political government, could not do more for our ailing banking sector by implementing the proposed reforms. With a few days left before a new government comes to power, we hope that it will take up the challenge of providing BB with its long-overdue independence by passing the ordinance.
