With just two weeks remaining in office, the interim government in Bangladesh has yet to approve two crucial banking reform laws, as reported by local media. These laws are deemed essential by the central bank to enhance regulatory oversight of the country’s financial sector. The pending legislation focuses on granting more autonomy to the Bangladesh Bank (BB) and restructuring the ownership and governance of banks.
The interim administration had promised to prioritize these measures following the 2024 July uprising, according to The Daily Star, a prominent Bangladeshi newspaper. Despite the International Monetary Fund’s (IMF) consistent advocacy for greater autonomy for the central bank and its provision of technical support under a $5.5 billion loan program, the draft laws are still awaiting approval at the finance ministry.
The delay in passing these laws has raised concerns, especially with the national election scheduled for February 12. The IMF has cautioned that delays in banking and fiscal reforms could have adverse effects on economic growth, inflation, and macro-financial risks. Bangladesh Bank Governor Ahsan H. Mansur has also expressed worries about the potential challenges of passing these laws post-election.
Central bank officials have highlighted that progress on the proposed amendments to the Bangladesh Bank Order, 1972, and the Bank Company Act has come to a standstill. The original draft aimed to remove bureaucrats from the BB board, but after objections from the finance ministry, the proposal was revised to allow the presence of one bureaucrat instead of three. Despite these revisions, the approval for these changes is still pending.
Another significant reform awaiting approval involves amendments to the Bank Company Act, which was approved by the BB board last October but has not progressed further. With time running out for the interim government, there are concerns that the failure to pass these reforms before the election could hinder efforts to strengthen financial sector governance and regulatory independence.
