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Bangladesh Bank Governor Ahsan H Mansur has assured the public that no bank will become insolvent.
He detailed the central bank’s plans to evaluate the financial health of banks and implement necessary reforms during a press conference on Sunday.
“The central bank will initially assess the financial stability of 10 banks and then gradually cover all banks. If necessary, banks will be merged to protect depositors' funds," said Mansur, reports bdnews24.com.
The interim government is making efforts to reform the banking sector, which had stagnated during the Awami League period.
Weaknesses in various banks are becoming apparent, causing concern among depositors.
Governor Mansur said, "Bangladesh Bank has not frozen any institutional accounts. Even if there have been irregularities, institutional accounts have remained operational to ensure that business activities can proceed normally.
“Opportunists are engaging in negative propaganda about this matter.”
Mansur provided an update on the formation of a task force to oversee banking reforms.
He said the task force, with assistance from the Asian Development Bank, or ADB, will begin its work within 10 days.
The governor said, "The ADB will assist in preparing forensic reports for the banks. The task force will assess the banks' health and act accordingly.
"We are actively verifying daily transactions and continuously monitoring cash flows."
On the issue of microloan distribution, Mansur highlighted a problem with distribution despite having Tk 250 billion available.
“The issue lies with procedural flaws. We need more flexible policies for loan distribution to aid small entrepreneurs. ADB is interested in supporting this sector,” he added.
Mansur said policies that favour influential individuals will be reviewed and potentially revoked if found to benefit only a select few.
“To tackle nepotism in the banking sector, we may need to amend the laws if necessary. However, we will not implement this right away, but rather in the final stages, as laws cannot be frequently changed.”
He explained that Tk 700 billion was outside the banking sector, which caused the liquidity crisis. The situation has improved somewhat with the return of Tk 300 billion.
Therefore, he added, the central bank has lifted the imposed withdrawal limits.
"Customers of the 10 troubled banks must remain patient for a bit longer," he added.
Governor Mansur said liquidity support to Exim Bank followed previous procedures but will not continue in the same manner.
"Interbank borrowing will provide future liquidity support, with the central bank acting as a guarantor."
Mansur warned buyers interested in acquiring assets of S Alam Group to proceed at their own risk, as the central bank will not assume any responsibility.
S Alam Group is currently under investigation for alleged embezzlement and money laundering in the banking sector, with government agencies and the Anti-Corruption Commission, or ACC, looking into the matter.