Former cenbank governor advocates liquidation over rebranding of struggling banks

It is better to liquidate struggling banks instead of rebranding them, former governor of Bangladesh Bank Dr Saleh Uddin Ahmed said today (30 March).

The distinguished economist also expressed concerns regarding the unusually high number of banks in the country, which currently stands at 61. 

"Banks' approvals, motivated by political agendas, were intended to facilitate embezzlement of funds," he said while speaking as chief guest at a shadow debate competition titled "Merging Banks to Strengthen Good Governance in Banking Sector" organised by Debate for Democracy.

He asserted that none of the banks, sanctioned via political channels, are performing well as their primary objective was to facilitate financial malpractice.

Debaters from Prime University supported the motion as proponents, while representatives from BGMEA University of Fashion and Technology opposed it. The opposition emerged victorious in the session presided over by Debate for Democracy Chairman Hasan Ahmed Chowdhury Kiran.

Saleh Uddin Ahmed urged authorities to adopt stringent measures to safeguard the country's economy, saying, "The banking sector needs to be controlled with iron fists."

He said, "We have positive examples of successful mergers in our country, such as Eastern Bank, but we must ensure that the influence of struggling banks does not jeopardise the stability of stronger institutions."

Furthermore, he advocated harsh punishments for bank officials engaged in corruption and embezzlement. 

Stressing the need for banking law reforms or the effective implementation of existing laws, Saleh Uddin Ahmed said, "The audit report of the central bank remains stagnant for years without any action being taken, while bank directors often pass their debts among themselves. These are alarming indicators for the economy."

When asked about the central bank's policy capacity, Saleh Uddin Ahmed said Bangladesh Bank is currently lacking in its policymaking capabilities.

He advised BB authorities to take decisive actions independently and implement them properly for the nation's economic welfare, emphasising the importance of proper law enforcement in addressing economic challenges.

"The predominant issue in our country is the lack of implementation of laws, even when they exist," he noted.