Bangladesh’s balance of payments (BoP) has significantly improved, with a robust foreign savings position, eliminating the necessity of seeking foreign loans through “sycophancy,” Bangladesh Bank Governor Ahsan H Mansur stated today (4 March 2025).
“We will not compromise. Our external financial position is now very strong,” he asserted during a roundtable titled Path to Recovery for the Banking Sector, organised by The Business Standard at its office in the capital.
Addressing the government’s budget deficit, he stressed that increasing revenue is the only viable solution. “If we can boost revenue, we won’t need to depend on the IMF. I have already informed them that we do not require their funds,” he said.
The governor projected that Bangladesh’s remittance income for the current fiscal year would reach nearly $29 billion. Additionally, if export earnings hit $50 billion, even after import payments, the country would still have a surplus of $10 billion.
Challenges in Banking Sector: Slow Deposit Growth
Despite the strong external financial position, Mansur identified sluggish bank deposit growth as a critical concern. “Private sector savings are not increasing. However, an improved balance of payments will support savings growth,” he explained.
The governor pointed out that the balance of payments, which was negative under the previous government, is now in surplus. “Our foreign savings have increased due to a positive current account balance. To further enhance the financial sector, we need to attract more deposits from expatriates,” he added.
He stressed the importance of focusing on the private sector, particularly financial accounts, through mechanisms such as the stock market or offshore banking units. “Banks can enhance cash flow and mobilise deposits via offshore banking. We must increase efforts to attract deposits from non-resident Bangladeshis,” he said.
“If we can achieve this, our balance of payments will strengthen even further,” Mansur concluded.
Banking Resolution Act Expected by July
The governor also announced that the long-awaited Banking Resolution Act is expected to be finalised by July 2025. “At our current pace, we should be able to enact the Banking Resolution Act by July,” he stated at the roundtable.
When asked how much of the banking sector reforms could be completed by December, Mansur responded, “The central bank’s structural reforms will be completed by July-August. We will initiate reforms in the banking sector, but their long-term success will depend on the next elected government.”
He acknowledged that the reform agenda is ambitious but assured that efforts are proceeding as swiftly as possible.
BB to Form Task Force for Banking Regulatory Simplification
The Banking Resolution Act aims to provide a legal framework to address financial crises in Bangladesh’s banking sector. It will enable swift policy decisions on mergers, acquisitions, liquidation, or recapitalisation of troubled banks, thereby preventing disruptions in the financial system and ensuring economic stability.
A key provision of the act is granting Bangladesh Bank greater authority to restructure failing banks. It also seeks to protect depositors and creditors by implementing a resolution framework to minimise risks, particularly for small account holders, in case of a bank collapse.
By enhancing regulatory oversight and equipping the central bank with necessary legal tools, the law is expected to restore confidence in the banking system. Additionally, it aims to improve governance, accountability, and transparency within the sector, fostering long-term financial stability.
Banking Regulatory Simplification Task Force to be Formed
To streamline banking operations, the central bank will establish a Banking Regulatory Simplification Task Force, Mansur announced at the roundtable.
The decision follows complaints from managing directors of several banks, who highlighted the excessive number of regulatory reports required each month. They also expressed concerns over frequent directives from the central bank, which have created confusion and hindered timely decision-making.
50pc of Banking Agents to Be Women
The task force will include managing directors from various banks as well as financial experts. During the session, the governor instructed Selim RF Hussain, chairman of the Association of Bankers, Bangladesh and managing director of BRAC Bank, to collaborate with other bank leaders and submit recommendations on regulatory simplification to the central bank.
Additionally, the Bangladesh Bank is set to issue a circular mandating that at least 50% of banking agents be women, a move aimed at promoting gender inclusivity in the sector.