Bangladesh Bank Governor Dr Ahsan H Mansur on Tuesday said it may take five to ten years for weak banks to fully recover.
"We are closely monitoring the management of weak banks on a daily basis and overseeing their activities. While we have already provided substantial liquidity support, these banks will require 5-10 years to fully recover with adequate capital.”
He was speaking at a discussion “Path to Recovery for the Banking Sector,” organized by The Business Standard at the newspaper's office in Eskaton.
Repatriation of wealth takes many years
Regarding the repatriation of wealth, the governor noted that the process would be lengthy.
He explained: “Our best chance lies in securing a favorable judgment in Bangladesh and obtaining some attachment of properties abroad."
He remained optimistic, however, citing successful wealth repatriation efforts in countries like Nigeria, Malaysia, and Angola.
Regarding repatriation of laundered money back through legal channels, an economist told Dhaka Tribune that bringing back the laundered money is a highly complex process as financial tracing or paper tracking is not so simple.
Foreign Loan and internal deposit
To address the government's budget deficit, the governor said that: “Increasing revenue is the only solution. If we can increase revenue, we will not need to rely on the International Monetary Fund (IMF).
He also said the country's external financial position is now very strong. As Bangladesh's balance of payments has significantly improved, with a very strong foreign savings position, there is no need to seek foreign loans through sycophancy.
“This fiscal year, our remittance income will be nearly $29 billion. Additionally, if our export earnings reach $50 billion, after paying for imports, we will still have an extra $10 billion,” Mansur said.
The governor also highlighted the fall in bank deposit growth. He said: “Our current problem is that we are unable to increase bank deposit growth. Private sector savings are not growing. However, if we can improve the balance of payments, that will help our savings grow. That's one way to grow savings.”
“The balance of payments, which was negative during the previous government's tenure, is now positive. Our foreign savings have increased because our current account balance is positive. To further improve the financial sector, we need to increase deposits from expatriates,” he further said.
Mansur also said: “We need to focus on the private sector, particularly on financial accounts. This could be through the stock market or offshore banking units.”
Woman in banking
Nearly half the agent bankers will soon be women, the governor said. “My feeling is that agent banking will overtake conventional banking. It's a silent revolution.”
“Many housewives, and daughters have been appointed as directors of the bank. They do not have the qualifications and experience. We do not want this. The fit and proper test (experience and qualification test) for becoming a director of the bank is being reviewed.”
“Everyone, including those who are currently directors, will have to go through this scrutiny. They must have the qualities to be a director of the bank. The owners of the bank will also have to go through this scrutiny. If they have the qualifications, the owners will become directors, if they do not have the qualifications, they will not,” Ahsan H Mansur also said.
During the session, the governor also instructed Selim RF Hussain, chairman of the Association of Bankers, Bangladesh, and managing director of Brac Bank, to collaborate with the managing directors of banks and submit their suggestions on regulatory simplification to the central bank.
