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Former Bangladesh Bank governor Dr Mohammed Farashuddin Ahmed criticised the central bank's recent actions on bank mergers and acquisitions, as he said the central bank has seen a deterioration of standards in recent years.
Bank mergers are not a new concept, and the process is not forceful, he commented at a conversation organised by the Economic Reporters' Forum (ERF) at its office in Dhaka on Thursday.
"The two banks involved in a merger should consent to the process," he said. "This is the standard practice worldwide."
The former governor said voluntary mergers had occurred in Bangladesh in the past. Discussions and agreements, rather than compulsion, should be the guiding principles, he argued.
In his speech, Dr Farashuddin highlighted a perceived disparity in how loan defaulters are treated.
"Farmers are jailed for taking loans as small as Tk 500, while those who borrow Tk 100 billion go free," he said.
Regarding food production amid adverse weather conditions, he feared that this year's Boro paddy yields might be affected. He urged the government to prioritise procuring at least 2.0 million tonnes of food grains within the next 15 days.
Dr Farashuddin said the Bangladesh Bank grants permission for branch opening based on the bank's own assessment.
He compared Bangladesh's ratio of bank branches to population with neighbouring countries. "In Bangladesh, a single branch serves around 15,000 people, while in India and Pakistan, the figure is 12,000."
"There is a need for more bank branches to better serve the population."
Offering a broader perspective on Bangladesh's economy, Dr Farashuddin appreciated the country for being one of the few to maintain consistent GDP growth.
"Bangladesh has maintained a geographical balance and has not entered the pocket of any other country."
The former Bangladesh Bank governor said not everyone enjoys the benefits of independence equally. "There is a remarkable disparity in how much people benefit. Some enjoy the advantages considerably more than others."
Dr Farashuddin conceded that he agreed with the perception of declining standards at Bangladesh Bank compared to the past.
He also criticised the apparent lack of action regarding money laundering, specifically questioning the silence of both the government and the International Monetary Fund (IMF).
Dr Farashuddin linked the ongoing liquidity crisis in the banking sector to repeated loan rescheduling. "This practice is fueling inflation because the central bank is essentially printing more money to compensate for the lack of liquidity. That is why inflation is not cooling off."
The former governor said inflation has been hovering around 10 per cent for nearly ten months. He challenged the government's claim that people are doing well despite this high inflation rate.
"While some employees might have received slight salary increases," he said, "these do not adequately compensate for the erosion of purchasing power caused by inflation."
Dr Farashuddin noted that many countries have successfully controlled inflation, but Bangladesh could not.
"We need to change our monitoring system to control inflation. Instead of monitoring on TV, direct supervision should be increased. Otherwise inflation cannot be tamed."
He acknowledged that poverty today is different from poverty 30 years ago. "While there has been some progress, a vast wealth gap persists between the rich and the poor," he said. "This disparity demands urgent attention."
ERF President Mohammad Refayet Ullah Mridha presided over the event, while General Secretary Abul Kashem moderated the discussion.