On 25 February, textile industrialist Mustakur Rahman was appointed Governor of Bangladesh Bank, following the removal of Dr. Ahsan H Mansoor. This is the first time in the history of the country that a businessman has held the post of Governor. Questions have been raised on the decision of the new government.
Dr. Ahsan Mansoor took charge as the Governor of Bangladesh Bank on 14 August 2024. The appointment of Dr. Mansour, a retired senior official of the International Monetary Fund, was widely praised. At that time, the financial sector was almost in recession.
Foreign exchange reserves, which had increased to $48 billion in August 2023, were heavily looted. The reserves declined alarmingly and fell to just $20 billion by August 5, 2024.
The market exchange rate of the US dollar, which was 87 taka per dollar in 2022, declined sharply, reaching 125 taka per dollar by 5 August 2024.
Of the 61 banks in the country, 11 were on the verge of bankruptcy.
During the fifteen and a half year rule of the late autocrat Sheikh Hasina, the banking sector suffered the most widespread looting. Despite there being no need for 61 banks in the country, licenses were given due to Hasina’s arbitrary decisions. These licenses were issued to create extraordinary opportunities for capital plunder by his relatives, influential leaders of the Awami League, and elite businessmen and “robber barons” who flourished under his patronage.
There is no other example anywhere in the world where a single person or group has been allowed to control seven banks.
Research conducted by the White Paper Committee constituted by the interim government revealed that the S Alam Group embezzled approximately Rs 200,000 crore from these seven banks and smuggled it abroad. Between 2017 and 5 August 2024, the group embezzled approximately Rs 70,000 crore from Islami Bank Bangladesh through various means, pushing the bank to the brink of bankruptcy.
Former Land Minister Saifuzzaman Chaudhary looted the United Commercial Bank. Meanwhile, Sheikh Hasina’s industry and private investment advisor Salman F Rehman left defaulted loans worth over Rs 50,000 crore in various banks through his company Beximco.
Although some stability returned to the banking sector during the year and a half since Ahsan H Mansur was appointed Governor of Bangladesh Bank, there was no significant progress in resolving the problem of defaulted loans. In fact, because there were no longer efforts to hide bad loans as before, the proportion of classified loans reported by Bangladesh Bank steadily increased and reached more than 36 percent by September 2025. It fell again to 31 per cent in December, after rules on loan rescheduling were relaxed, but this provides little reassurance.
An even more serious issue is that the majority of Bangladesh’s defaulted loans have already been smuggled abroad. None of these illegally transferred funds have returned to the banking system; Not even a single taka has been collected during the one and a half year tenure of the interim government. Despite this, Mansour managed to handle the crisis in the banking sector with considerable success.
Bangladesh’s foreign exchange reserves grew rapidly during his tenure, surpassing $35 billion on 25 February 2026, the day he was removed from office. For more than a year, Bangladesh Bank managed to keep the exchange rate stable at 122 taka per US dollar.
Troubled Islamic Bank Bangladesh managed to recover and achieve stability. United Commercial Bank also overcame most of its earlier troubles. Five Islamic banks, which were on the verge of bankruptcy, were merged to form a joint Islamic bank, which has successfully started operations.
Total bank deposits have again exceeded Tk 18 trillion, and bank credit is expected to grow by 11 percent in the 2025-26 fiscal year.
The Governor’s tight monitoring of banks may not always be in line with the government’s priorities. But financial sector stability is more a matter of solid policy than political allegiance
Despite intense pressure to lower lending rates, Mansour did not give up, preferring the goal of reducing inflation. Remittances were expected to reach about $35 billion in the fiscal year ending June 30, 2026. However, due to the ongoing conflict between Iran and the United States–Israel alliance, there are concerns that remittance inflows may decline since March.
Bangladesh’s current account balance, which faced severe deficit during the last three years of Sheikh Hasina’s rule, has returned to surplus. The dangerous deficit in the financial account has also ended. These figures show that the country’s financial sector has achieved stability in the last one and a half years after emerging from the plunder of authoritarian rule.
Unfortunately, at this time the interim government blocked the proposed amendment to the Bangladesh Bank Order, which was intended to strengthen the autonomy of the central bank. Proposals to amend the Money Loan Court Act and the Bank Company Act were also stopped. As a result, the country lost an important opportunity to reform the banking sector.
Mansour had proposed several appropriate reforms to address the crisis of defaulted bank loans, but these proposals were also defeated. Was it appropriate to stop these initiatives? And will any political government really accept the issue of autonomy of Bangladesh Bank?
Sadly, Governor Mansoor, who had achieved such commendable success, had to leave his post. Even though his contract had more than two years left, it was suddenly canceled without any discussion with him.
It is not unusual for a newly elected political government to appoint individuals of its choice to key positions. However, given how successfully Bangladesh Bank managed the economic crisis under Mansoor’s leadership, it is difficult to justify removing him in this manner.
If the contract had been terminated through polite negotiations, perhaps the matter would not have been so condemnable. But suddenly dismissing him and appointing a businessman as governor sends the message that political loyalty is the primary qualification for the post. This can be dangerous for the economy.
If the new governor takes a more lenient stance towards defaulted loans, the banking sector may once again face a serious crisis.
In the past, during Sheikh Hasina’s rule, the weak roles played by two governors of Bangladesh Bank, Fazle Kabir and Abdur Ruf Talukdar, allowed a culture of plunder to flourish in the banking sector.
Bangladesh Bank is the regulatory authority of the financial sector. Therefore, the Governor’s strict monitoring of banks may not always be in line with the government’s priorities. But financial sector stability is more a matter of solid policy than political allegiance.
* Moinul Islam is an economist and retired professor of the Department of Economics, Chittagong University
*The views expressed are the author’s own.