Central bank shake-up: Why is BNP undermining its reformist legacy?

The removal of Bangladesh Bank Governor Ahsan H Mansur, widely credited with steadying an economy that was on the brink of potential collapse, has been described by many as nothing short of a blunder by the new government. Of course, any government has the legal authority to appoint or remove a governor in pursuit of its economic agenda. Yet two aspects of this episode have shocked observers. First, the manner of Mansur’s departure, marked by public humiliation rather than a well-earned vote of thanks. Second, the appointment of a businessman burdened by apparent conflicts of interest and lacking expertise in banking and macroeconomic management.

This mishandling of central bank leadership by the Bangladesh Nationalist Party (BNP) government warrants close scrutiny. However, responsibility does not rest with the current administration alone. The immediate past interim government also bears some blame. A draft law granting operational autonomy to Bangladesh Bank remained with the finance ministry for over four months. The proposed reform would have removed three government officials from the central bank’s governing board. Unfortunately, then Finance Adviser Salehuddin Ahmed—himself a former governor—reportedly yielded to bureaucratic pressure and shelved the reform agenda.

It is worth recalling that the interim administration led by Professor Muhammad Yunus, which emerged from the 2024 mass uprising against a toxic blend of autocracy and kleptocracy long accused of plundering banks and laundering funds abroad, had pledged sweeping reforms in the banking sector. But Bangladesh Bank was conspicuously absent from its long list of more than 180 ordinances. Had the interim government enacted a measure to restructure the central bank and secure its independence as an effective regulator, the present controversy might have been avoided.

A glance back at 2003 offers a striking contrast. During BNP’s earlier tenure in power, late Finance Minister Saifur Rahman moved to strengthen the central bank’s authority. On March 1, 2003, he introduced amendments to the Bangladesh Bank Order of 1972, enhancing the institution’s powers to curb loan defaults. Three additional bills, including reforms to the Artha Rin Adalat Ain (Money Loan Court Act), were passed through Jatiya Sangsad that same week.

On March 10, a group of employees under the banner of Jatiyatabadi Officers’ Association tried to create chaos at the central bank and disrupt then Governor Fakhruddin Ahmed’s routine, with further plans for the next day (“Pro-BNP officers likely to besiege governor today,” The Daily Star, March 11, 2003). On that day, presidential assent to those four bills related to banking sector regulation was received. The following day, The Daily Star carried another report with a stark warning from Saifur Rahman that no one would be allowed to create any trouble at the central bank or derail reforms.

At that stage, those officers retreated. However, within a few months they again organised a protest against certain administrative measures. On October 28, they besieged Fakhruddin Ahmed in his office for about an hour. Saifur Rahman extended strong support to the governor and, on October 30, 10 officers, including the president and general secretary of the Collective Bargaining Agent (CBA) union, were dismissed. Rahman’s firm stance restored order and underscored BNP’s commitment, at the time, to insulating the central bank from partisan interference.

In contrast to its earlier record of resisting politicisation within the central bank, BNP’s current approach appears to be yielding to pressure groups, both internal and partisan. Political affiliations and muscle-flexing within the banking sector plagued Bangladesh during the 1980s and 1990s. Although incidents of besieging and verbally abusing governors occurred under both BNP and Awami League governments, BNP once distinguished itself by confronting such disruptions decisively. The early signs this time, however, are troubling.

Historically, under the leadership of Khaleda Zia, BNP enacted important reforms, including the Bangladesh Bank (Amendment) Act, 2003, aimed at curbing loan defaults. The appointment of Md Mostaqur Rahman as the new governor seems inconsistent with that legacy. Some observers, including the Transparency International Bangladesh (TIB), have noted that the appointee was previously a loan defaulter and later benefited from rescheduling “under special consideration.” Moreover, clause 10, sub-clause 9(d) of the amender order clearly states that no individual who has defaulted on payments to the government, a banking company, or a financial institution is eligible to serve as governor or deputy governor. This raises a critical question: was the appointment an oversight then, or was it a disregard for the very reforms once championed by BNP?

According to his official profile, the new governor previously served as chairman of the Bangladesh Garment Manufacturers and Exporters Association’s (BGMEA) Standing Committee on Bangladesh Bank and held memberships in several trade bodies, including the BGMEA, the Real Estate and Housing Association of Bangladesh (REHAB), the Association of Travel Agents of Bangladesh (ATAB), and the Dhaka Chamber of Commerce and Industry (DCCI). These organisations primarily advocate for the interests of their respective members. It is therefore reasonable to ask whether a former trade representative can impartially regulate sectors with which he has been so closely associated, especially if former colleagues seek special considerations similar to those he once received.

The finance minister’s response of “no comment” to questions surrounding the appointment has only deepened public concern. Why not affirm unequivocally that the most qualified candidate was selected? Why not assure the public that due diligence was rigorously applied? Above all, can it be said with confidence that this decision does not undermine BNP’s earlier reformist legacy?

These are not partisan questions. They go to the heart of the institutional integrity and independence of Bangladesh Bank—principles that are indispensable to economic stability and public trust.

Kamal Ahmed is consulting editor at The Daily Star. He led the Media Reform Commission under the immediate past interim government. His X handle is @ahmedka1.

Views expressed in this article are the author's own. 

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