Steadying the ship in the banking sector
As the country prepares to function under an interim government, its banking sector is going through some upheaval. On 7 August, six top Bangladesh Bank officials, including deputy governors, were forced to resign. There are long queues at banks where withdrawal limit has been set at Tk1 lakh; many ATMs are dry. The Business Standard reached out to economists and bankers to get some clarity on where the sector is heading.
We cannot completely drain Bangladesh Bank of its talent
Dr Ahsan H Mansur, executive director, Policy Research Institute (PRI)
The incident of vandalism at the Bangladesh Bank is unfortunate. There are reasons for the public's discontent; it is understandable.
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But at this moment, there is no government in the country. We hope that the situation will stabilise quickly once the interim government is formed. A new governor needs to be appointed quickly, but this will also require some time. So, what is needed now is patience.
We cannot completely drain an institution like Bangladesh Bank of its talent. These issues need to be addressed with adequate time and careful consideration. Any kind of wholesale resignation is unexpected. Their actions, efficiency, and other aspects need to be closely examined.
Then we have to come to the decision if they should hold the position or not. It is up to the government now. I expect the interim government to intervene and look into this matter as soon as it comes into play.
The Bangladesh Bank issued a directive not to allow customers to withdraw more than Tk1 lakh in cash from banks on Thursday. I think declaring such immediate policy is not necessary. It will intensify panic among people.
The central bank should share hopeful words stating that although there is a liquidity crisis in the banks, the situation is expected to normalise quickly and people will be able to withdraw their deposits.
In the absence of a finance minister, the Financial Institutions Division can temporarily take some responsibilities. The new finance minister — once appointed — must address the issues related to our banking sector promptly with the necessary skill and management.
Dr Ahsan H Mansur spoke to TBS Staff Feature Writer Ariful Hasan Shuvo over the phone.
Banks should just keep calm and do their jobs
Mohammad A (Rumee) Ali, ex-CEO, Standard Chartered Bangladesh and former deputy governor, Bangladesh Bank
Each and every bank has their own management. They should simply keep on following the rules and regulations set by the Bangladesh Bank.
It is not every day that multiple deputy governors of the central bank resign. So there is a vacuum, but there is no need to panic about it. The boards and management should just keep on following the rules and regulations of the industry until the proper authority is restored, which will happen in the next few days.
Only the deputy governors have resigned, the structure is there, the whole central bank is not in peril. Yes it is a little concerning, but there is no need to panic. We should stay calm and bank's should do their duty. I believe the problem will sort itself out within a couple of days. We should not engage in speculation until then.
Bank's were unable to service the ATMs properly in the last few weeks. ATMs are just machines, you have to refill them. People withdraw lots of money before Eid, before long holidays or in times of crisis as well. Bank managements have to step up and do their job. Probably, they were a little uncertain but things are moving in the right direction now.
I do not see any signs that banks may run out of money. The worst of it is over, yes there is still some disorder, but after such a big upheaval, things like this happen. Hopefully, things will improve over the next few days.
Mohammad A Ali spoke to TBS Editorial Assistant Nasif Tanjim over the phone.
Cash withdrawal limit to combat laundering, not liquidity crisis
Selim RF Hussain, managing director and CEO, Brac Bank
Four deputy governors have resigned. I am not sure if the governor will resign too. It is true that the changing political scenario has caused a bit of unease in the banking sector. But overall, the sector is able to serve its customers well enough.
Some bank offices have been vandalised. Few banks have challenges like liquidity crises — we already know that. But there is no direct impact of the ongoing political unrest on all the banks. For instance, we [Brac Bank] have not faced any major challenges.
Since our government is not established yet, correspondents have suspended foreign exchange lines. But we expect these will be reinstated once the new government is in place.
Also, a cash withdrawal limit policy of Tk1 lakh was applied on Thursday. I think this restriction was imposed to restrict money laundering and to encounter terrorist financing. It is not because of any liquidity crisis. So, customers have no reason to panic.
At this point, the Bangladesh Bank needs stabilisation first. Because it also applies to the banking sector in turn.
Selim RF Hussain spoke to TBS Staff Feature Writer Ariful Hasan Shuvo over the phone.
