The process of recovering laundered assets should not be interrupted due to political reasons, Bangladesh Bank Governor Ahsan H Mansur said yesterday.
“Regardless of which government comes to power in the future, this initiative should not be stopped,” he said.
While it may be possible to seize laundered assets within this year, completing the legal process and recovering the stolen assets may take at least five years, he mentioned.
The central bank governor made these remarks while addressing a seminar titled “Macroeconomic Challenges and Banking Sector Reforms”, organised by the Economic Reporters’ Forum (ERF) at its office.
Mansur acknowledged that recovering laundered assets is a significant challenge but one that is achievable.
He pointed out that countries like Malaysia, Angola, and Nigeria had successfully recovered laundered assets, though it took at least five years in each case.
Discussing the asset recovery process, he stressed that there is no reason for pessimism and expressed optimism about the country’s efforts.
“We have already received considerable assistance from various countries, and joint investigation teams have been formed. However, this is not something that can be completed in one or two years.
“It is critical that the next government continues these efforts in the right direction. If the process is interrupted, success will not be achieved,” he noted.
The governor also highlighted the need for strong measures to address the challenges facing the banking sector.
He mentioned that a draft of the Bank Resolution Act had already been prepared and that weak banks would be recapitalised, ensuring full protection for depositors.
He cited Islami Bank Bangladesh, which was among the hardest hit with one family allegedly taking away 87 percent of the bank’s total loans.
Despite this, he pointed out that the bank has since recovered due to public trust and is now receiving significant deposits and issuing loans.
On the country’s economy, the BB governor mentioned that the nation has always faced challenges, but never before has it encountered such a combination of issues.
While Sri Lanka faced only a Balance of Payments (BoP) crisis, Bangladesh has experienced significant money laundering alongside problems like BoP deficits, inflation, revenue shortfalls, and currency devaluation.
However, he provided some positive news: the current account of the BoP, which reflects the sum of a country’s net exports, income, and transfers, has turned positive, and inflation is on the decline.
He also mentioned that interest rates on treasury bills and bonds have started to decrease, noting that the rate, which had risen to as high as 12.5 percent, is now down to 9.5 percent.
“This indicates that the central bank’s policies are starting to work. It will take about 1 to 1.5 years to see the complete results,” he added.
Addressing the bleak investment scenario in the country, Mansur said that the lack of investment was not solely due to high interest rates. Rather, he said the main issue was the low deposit growth, which increased by only 7.5 percent.
He also pointed out that the days when managing directors of banks could sit idly and still make profits are over.
“In the future, they will need to lend to the private sector to generate income,” he said, adding that even if the Bangladesh Bank does not reduce the interest rate, the rate will decrease as market conditions change.
Regarding foreign exchange reserves, the governor gave assurances that there is no need to worry. Thanks to the crackdown on money laundering, remittances from expatriates have increased, showing a 24 percent growth so far.
He projected that remittances would exceed $30 billion by the end of this fiscal year. He also mentioned that exports are on the rise.
“Overall, after the political changeover, the exchange rate has remained stable without selling a single dollar from the reserves,” he stated.
He also responded to questions about the dollar rate of Tk 122 per USD, saying, “We have maintained that the rate will not be determined by Dubai. Our banks will buy dollars at the rate we set.”
Currently, the open market rate is Tk 123.50 per USD, while banks are offering it at Tk 121.50 per USD. With an additional 2.5 percent incentive, the rate becomes Tk 124 per USD, meaning banks are getting a better rate.
“Over time, the dollar rate will be determined by the market, but that will not happen immediately,” the governor concluded.
Mustafizur Rahman, senior fellow at the Centre for Policy Dialogue, said, “We have never before faced such a combination of challenges in the post-independence period.”
He stated that while most people would view controlling inflation as the primary challenge, the focus should instead be on increasing people’s purchasing power by boosting investment.
“Major reforms must be made to the banking sector and the National Board of Revenue. Direct taxes should be increased in place of indirect taxes,” he emphasised.
Regarding banking reforms, he noted that the Ministry of Finance should move away from its tendency to interfere with the Bangladesh Bank.
The economist also stressed that the interim government must make tangible progress in recovering laundered money to set a precedent for the next administration.
Mohammad Ali, managing director of Pubali Bank, said everything should be integrated in real-time to ensure good governance and transparency.
He raised concerns about the eKYC (Electronic Know Your Customer) system, questioning, “If a fugitive opens an account and begins transactions through this system, who will take responsibility?”
The seminar was chaired by ERF President Doulot Akter Mala and conducted by ERF Co-General Secretary Manik Muntasir.
