Bangladesh Bank must use logic and data to reject politically pressured bank approvals, says Salehuddin

The central bank’s role is to act as a guardian of the economy, he says

Former central bank governor Salehuddin Ahmed has urged the Bangladesh Bank to stand firm against political pressure regarding the approval of new banks.

He emphasised that regulators must back their decisions with solid data and financial logic.

Speaking at a banking and finance conference at a Dhaka hotel, the former finance advisor to the Muhammad Yunus-led interim government stressed that while political and corporate pressures are inevitable, the central bank’s role is to act as a guardian of the economy.

"Simply saying 'no' is not enough," Salehuddin said.

"You must present sufficient documents, information, and financial arguments to support your stance. If the government still proceeds with an approval, that is their responsibility, but the central bank must fulfil its duty to warn of the risks."

The conference, organised by the research firm Dnet, brought together top bankers and researchers to discuss the systemic risks facing the country’s financial sector.

Other industry leaders emphasised the importance of credit verification and boardroom ethics.

Rizwan Dawood Shams, managing director of IPDC Finance, raised concerns about identity theft in lending, noting cases where large loans were disbursed in the names of small-scale vendors who were unaware of the transactions.

During a panel discussion, Mashrur Arefin, chairman of the Association of Bankers, Bangladesh (ABB), offered an assessment of the sector's health.

"We were living in a fool’s paradise, believing defaulted loans were around 20 percent. The truth is, they are well over 30 percent," he said.

He also criticised a pervasive "culture of flattery" within the industry, where bankers prioritise pleasing their boards over sound management.