Dhaka, Feb 1 (IANS) With barely two weeks left in office, the interim government has yet to pass two critical banking reform laws that the central bank says are essential for strengthening regulatory oversight of Bangladesh’s financial sector, local media reported on Sunday.
The pending laws relate to enhancing the autonomy of the Bangladesh Bank (BB) and reforming the ownership and governance structure of banks.
Both measures were at the top of the reform agenda pledged by the interim administration in the aftermath of the July uprising in 2024, reports a leading Bangladeshi newspaper, The Daily Star.
The International Monetary Fund (IMF) has also consistently pushed for greater autonomy for the central bank and, under its $5.5 billion loan programme, provided technical assistance for drafting the proposed amendments.
Despite this, both draft laws remain stuck at the finance ministry. The Bangladesh Bank submitted the proposals several months ago and has repeatedly urged the government to ensure their passage before the national election scheduled for February 12.
So far, the interim government has enacted only two banking-related laws: the Bank Resolution Ordinance and the Deposit Insurance Ordinance.
Central bank officials say progress on the remaining drafts has stalled, including proposed amendments to the Bangladesh Bank Order, 1972, and the Bank Company Act.
In a press release issued on Saturday following its Article IV consultations, the IMF warned that delays in banking and fiscal reforms could weaken economic growth, fuel inflation and heighten macro-financial risks.
Bangladesh Bank Governor Ahsan H. Mansur also raised concerns over the delays during a public programme last week, cautioning that passing the laws after the election would be difficult, the local media report said.
According to officials, the original draft amendment to the Bangladesh Bank Order proposed removing bureaucrats from the BB board, which currently includes three government officials, the report added.
However, after objections from the finance ministry, the proposal was revised to allow the presence of one bureaucrat instead of three.
The amendment also seeks to elevate the Bangladesh Bank governor to the rank of a minister and mandates that the governor take an oath before the chief justice. Despite these revisions, the proposal has yet to receive approval.
The second major pending reform involves amendments to the Bank Company Act. The BB board approved this draft in October last year and forwarded it to the finance ministry, but it has not moved forward since then.
With time running out for the interim administration, central bank officials fear that failure to pass the remaining reforms before the election could undermine efforts to strengthen financial sector governance and regulatory independence.
–IANS
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