Financial sector 'will never recover' under current judicial system: BB Governor

Bangladesh Bank Governor Ahsan H. Mansur has expressed grave concerns about the financial sector's recovery under its present judicial system, as he disclosed plans to revise the ‘Artha Rin Adalat Ain’ (Money Loan Courts Act) soon.

The governor made these remarks in a recent interview with a local news outlet, criticising the present judicial system's impact on financial stability.

"If the judiciary continues on its current path, the financial sector will never be able to rebound," Dr Mansur asserted.

"Bangladesh Bank, the government, and the judiciary must work in harmony. To reach international standards, we must operate with similar capacity and accountability," he added.

Tough Stance on Loan Defaulters

Addressing the persistent issue of non-performing loans (NPLs), Dr. Mansur emphasised a zero-tolerance approach. "A defaulter should be called a defaulter," he stated unequivocally.

He added that even if a borrower obtains a stay order from the High Court, Bangladesh Bank should still classify them as a defaulter. "Because the way a bank knows a customer, it is not possible for the court to understand that."

Mansur cited a recent incident involving Agrani Bank, where a borrower was declared a defaulter despite having a stay order, leading to the issuance of a warrant against them. According to the Governor, such decisions are "policy-wise correct."

Organised Looting in banking sector

Responding to questions about the progress made in restructuring the banking sector over the past year, Dr. Mansur highlighted the deep-rooted nature of the problem.

"We have seen that this is not a one-day affair. Banks and financial institutions have been systematically seized for about eight to nine years," he said, adding that funds were then "methodically laundered" from them.

He likened the situation to a "honeypot" – a sweet repository from which honey was looted. "No one thought about protecting the safety of public deposits. Instead, it was used as a sector for looting," he lamented.

The Governor further alleged that this "process of looting" occurred "right before the eyes of the government" and "under the notice of Bangladesh Bank." Yet, he claimed, "no one said anything." In many cases, he added, "the concerned authorities even assisted those groups."

Mansur recalled that civil society had raised concerns, and he himself had warned about the impending crisis: "I directly told a former Governor, 'Be careful about Mr. X.' Because if he hijacks the banks, the entire sector will collapse."

He concluded with a dire analogy: "I then said, if several banks fall at once, we will even need ambulances. Unfortunately, that's exactly what happened – the entire banking sector was handed over to one family and opened up for looting."