Bangladesh Bank Governor Ahsan H Mansur said it is placing utmost importance to reorganize the banking sector and restore clients' confidence at a time the banking sector has been rocked by irregularities and money laundering.
In a press conference on Sunday in the central bank headquarter, he said no business accounts have been frozen by the central bank, this is just misinformation circulated by vested quarter.
Addressing the concerns, he emphasized continuation of operations of all banks and resolving the liquidity crisis. The governor announced a key change in deposit insurance, raising the guarantee for depositors from TK 100,000 to TK 200,000 in the event of a bank's bankruptcy.
"While a 100 percent guarantee on deposits is not offered anywhere in the world, we aim to protect 94.6 percent of depositors money," Mansur said adding this move is seen as a strategic attempt to reassure the public amidst growing concerns in the banking sector.
Mansur also highlighted the central bank's ongoing efforts to address liquidity problems without resorting to printing fresh money. "We are trying to solve banks' liquidity issue and are implementing an interim measure before massive restructuring," he stated.
A task force has been formed to maintain daily transaction information, ensuring close monitoring of the situation. Moreover, Bangladesh Bank is actively engaging with international financial institutions such as the IMF and ADB to garner support for these initiatives.
However, Mansur acknowledged challenges in disbursement of Tk 25,000 crore allocated for SMEs. "We face several problems in disbursing funds to SMEs. We want to do this in a soft manner, not in a harsh way," he noted, implying a cautious approach.
Bangladesh Bank has also decided to step in and assist banks facing financial difficulties. The governor assured that depositors would not be affected by these interventions.
He further stressed the importance of straightening the central bank's internal activities and underscored the necessity for collective efforts in asset recovery, stating that the bank is working with various organizations to address these issues.
Positive indicators have already emerged from some of these efforts. Mansur reported an increase in remittances and general improvement in cash flow. These results are seen as early successes of the measures taken to stabilize the banking sector.
Additionally, the governor hinted at potential modifications to the Banking Companies Act if needed to bring further order to the sector. On controversial S. Alam Group, Mansur said Bangladesh Bank would not be liable for any issues arising from the purchase of the group's assets, leaving the responsibility entirely to the buyers.
Mansur reiterated Bangladesh Bank's commitment to restoring stability, improving liquidity, and safeguarding depositors' interests, while avoiding the creation of fresh money.
These efforts form part of a broader strategy aimed at securing the long-term health of the country's banking sector, he said.
