Reform in banking sector impossible sans elected govt: Salehuddin

Finance Adviser Salehuddin Ahmed has categorically said that the reform in the country’s banking sector is not possible for the interim government, as this process is time-consuming.

“Reform in the banking sector is a time-consuming process. It is beyond our capacity, and the elected government will do it after assuming power,” he told questioners after emerging from a meeting with government officials in Nabinagar upazila of Brahmanbaria on Saturday.

He blasted the previous government for destroying the country’s economy and said many top leaders and officials of the then government siphoned off a huge amount of money, which is a rare instance in the world.

“We injected Tk 52,000 crore into 12 financially weak banks, in addition to Tk 22,000 crore provided in the past to restore normalcy and ensure stability in the banking sector. We are doing our best, but it seems the issue cannot solely be resolved locally,” said Salehuddin, one of the country’s prominent economists.

If the government increases the interest rate on savings certificates, everyone will buy it, and then no one will deposit their money in the banks, the former governor of Bangladesh Bank, told a questioner.

Liquidity is indeed a major issue for banks and the government has to maintain checks and balances in this regard, he said.

After increasing the interest rate, if all people buy saving certificates, then how will the banks manage the liquidity to meet the financial obligations, he said.

Bangladesh Bank is trying to rehabilitate the financially weak banks and Islami Bank is one of the references, he said, responding to another query.

The government has enacted the Bank Regulation Act, and under its first provision, it is committed to refunding depositors' funds held in any bank, he said.