Move to grant greater BB autonomy faces roadblock

Much-envisaged independent functioning of the central bank now hangs in the balance mainly as bureaucrats on the Bangladesh Bank board steer a reverse course from reforms, sources say.

As part of the ongoing reform recipes to empower the central bankers for proper implementation of the regulations, the banking-regulatory body moved for amending the decades-old Bangladesh Bank Order 1972 under which the central bank functions.

With the greater objective in mind, the central bank authorities kept the important matter on its agenda of the latest board meeting held on August 26 for its approval before placing to the interim government.

But the central bankers did not present the agenda before the board because of claimed non-cooperation by government secretaries on the 9-member board, according to the meeting insiders.

However, the secretaries who sit on the central bank board rejected the claim, saying that the issue was discussed in the board meeting where they made some observations in the proposed draft in the amended BB order that needs to be corrected before placing at the next board meet.

Bangladesh Bank Governor Dr Ahsan H. Mansur heads the nine-member board. Eight other board-of-directors members are Finance Division secretary Dr Md. Khairuzzaman Mozumder, National Board of Revenue (NBR) chairman Md. Abdur Rahman Khan, Financial Institutions Division (FID) secretary Nazma Mobarek, former government secretary Mahbub Ahmed, economists Professor Rashed Al Mahmud Titumir and Dr Fahmida Khatun, private-sector representative A.K.M. Aftab ul Islam and BB deputy governor Dr Md. Habibur Rahman.

Seeking anonymity, a BB official said there were some 19 agendas in the last board meeting and the BB Order was number-five agenda of discussion.

Whenever the central bank moved to present the tabled agenda among the board members, according to the official, the bureaucrat-directors came to intervene and halted the presentation by saying it needs to be corrected further.

"And they moved to the next agenda but others on the board remained silent. It's unfortunate. Because of their noncooperation, it did not get approval and the process now hangs in the balance," the central banker told the FE writer.

Asked why other board members didn't raise their voice, the BB official said save two economists, there are four current and former government secretaries on the board.

"If private-sector representative and deputy governor raise voice, they might face noncooperation from the bureaucrats in the future. This could be a reason," the official said.

The Financial Express correspondent talked to some other BB officials present at the board meet who also echoed almost the same views.

Another BB official says if the BB order gets approved by the highest authority of the interim government, the bureaucrats will lose control over the regulator. Simultaneously, the status and salary of the central bankers will go up over that of the officers in the administration. "That's why the bureaucrats often oppose the matter when it comes to independent functioning of the BB," the central banker said, adding that the next board meeting has not yet been fixed.

"So, we don't know when it will take place. It's nothing but delaying the process," according to the central banker.

Contacted over the conundrum, FID secretary Nazma Mobarek claimed that the allegation of noncooperation was not true and the agenda was presented and discussed at the board.

"We had some observations regarding the amended draft of the BB order and suggested those to be corrected before placing to the next board meeting," she said.

Talking on the sticking-point, NBR Chairman Md. Abdur Rahman Khan said the amended draft has not been completed yet. "The work is still going on. That's why it did not get the board approval. There is nothing to make any obstacle to the process."

Dr Zahid Hussain, former lead economist of World Bank's Dhaka office, says amendment of the BB order is not something the board did not know. "I don't understand why the BB board did not allow presentation of the matter and why the other members were silent."

The economist adds: "It's very strange to me."

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