Noted bankers have suggested that Bangladesh Bank (BB) should function with full autonomy, as stipulated in the law, to keep the economy on track for strong growth. But autonomy now exists on paper, not in practice. Both the government and the BB should address the issue with utmost importance, as a vibrant banking sector is crucial to accelerate economic growth, they said at the Second Bangladesh Economic Conference-2021 held in Dhaka on Wednesday. To keep the economy stable, they suggested, integrity of the financial sector is a must.
The central bank plays the most significant roles, as it is the principal issuer of currency notes, banker to the government, banker to banks, controller of credit and decides the monetary policy. But critics say this is not the case for the Bangladesh Bank. The Banking Company Act 1991 empowered the central bank to regulate the country’s banking sector as an autonomous body. But it lost its independence after the Ministry of Finance established its own banking division. So, putting the central bank on the sidelines and forming other bodies to perform its tasks is not going to work, noted the critics. The Ministry of Finance also controls the appointment of board directors and managing directors for the state-owned banks, but when there is trouble the central bank is held responsible.
Media reports on Thursday said that even the bankers did not know what types of regulations should be followed to operate private banks when the central bank allowed them to roll out businesses. But the banks are different from other listed companies as depositors keep their money with a trust, so rules and regulations for banks should have been stronger. Even today, the bankers are yet to learn the regulations on how to prevent a family from taking over a number of banks. The Bangladesh Bank should be fully empowered to regulate both the state-owned and private banks instead of the public banks only. For this, the government has to amend Section 46 of the Banking Company Act. Otherwise, corruption will take hold and run rampant.
