Staff Correspondent:

Smaller Islamic banks that are in trouble are likely to be merged to form a larger one, Bangladesh Bank Governor Ahsan H Mansur said on Wednesday (April 9).

“There’s one large Islamic bank and many small ones – several of which are in trouble. So, we are going to merge those and hopefully make two large Islamic banks…to compete with each other,” he said while speaking at the 10th Annual Banking Conference 2025 organised by the Bangladesh Institute of Bank Management (BIBM).

He admitted there are regulatory gaps in the Islamic banking sector due to the absence of a dedicated Islamic banking law, but said efforts are underway to address these issues based on international standards.

Governor Mansur also noted that digital banking licences are being revised to promote small and nano-loans as part of the financial inclusion framework.

‘LIFE TO BE MADE DIFFICULT FOR MONEY LAUNDERERS’

Regarding money laundering, the central bank governor said that individuals who have laundered money from Bangladesh will face serious consequences both at home and abroad.

He emphasised the central bank’s commitment to curbing money laundering and restoring integrity in the financial sector.

“A huge amount of money was laundered during the outgoing government’s tenure, particularly through the banking system. Bangladesh Bank is now taking multi-agency initiatives to recover these funds, and we are leading this effort. This is both a legal and moral imperative for us,” said Governor Mansur.

“Such incidents will not be allowed to recur in the future. Even if the laundered money is not fully recovered, we will make the lives of those involved extremely difficult,” he added.

The governor also stressed strong regulatory interventions, stating, “If any bank’s board fails to operate in accordance with banking regulations, we will intervene in the interest of depositors—and we will do so strongly.”

He noted that the central bank has already dissolved the boards of several underperforming banks and restructured them. “Just a few weeks ago, we replaced the boards of two more banks,” he added.

“We expect banks to establish proper governance on their own. If not, the central bank will step in for the sake of public interest. That message is loud and clear,” he warned.

Regarding reforms, the governor highlighted significant changes in the Bank Company (Amendment) Act 2023 to ensure improved governance, board constitution, and the qualifications of board members through proper ‘fit and proper’ assessments, aligning with international best practices.

He also mentioned the need to empower Bangladesh Bank through amendments to the Bangladesh Bank Order, ensuring autonomy and transparency in its operations. “We want a single regulatory framework for both public and private banks,” he added.

MFS, OTHER TECHNOLOGIES

He highlighted the rapid growth of mobile financial services (MFS), stating, “Last month, Nagad achieved a record volume of transactions. Currently, average daily MFS transactions stand at Tk 5,000 crore.”

He reaffirmed his commitment to building a stronger, more reputable banking system. “As Governor of Bangladesh Bank, I am committed to making our banking system stronger and more respected in the coming years.”

Referring to banks with negative capital, he said, “Our goal is to move them from negative to zero, and then to a positive state. This will take time, but we expect political changes will facilitate positive transformation.”

During the event, BIBM Director General Md Akhtaruzzaman presented the keynote paper. “This academic conference aims to provide analytical insights into evolving regulations and macroeconomic contexts impacting the banking sector,” he said.

He highlighted the sector’s transformation over the past decade and the challenges of digitalization. “We must ensure digitalisation does not leave anyone behind. Financial inclusion remains a top priority,” he said.

Akhtaruzzaman also emphasised the role of technology such as AI, blockchain, and machine learning in transforming banking operations, risk management, and customer experience. He concluded by stressing the sector’s responsibility in embracing green finance and supporting the country’s transition to a sustainable, climate-resilient economy.