Banking sector to be reformed before December: Finance Adviser

Finance Adviser Salehuddin Ahmed announced that banking sector reforms are targeted for completion by December. 

Speaking to reporters after a meeting with senior officials of the Nabinagar Upazila administration in Brahmanbaria on Saturday morning, he addressed key issues facing the sector.

Salehuddin Ahmed said that the current interest rate on savings certificates is appropriate, warning that further increases could harm banks. 

He explained that higher rates would drive people to invest in savings certificates, reducing bank deposits and exacerbating liquidity challenges. 

"If everyone buys savings certificates, where will banks get their funds?" he remarked.

Addressing concerns about resolving the banking sector's crisis, Salehuddin Ahmed noted that significant funds have been siphoned out of the country, a phenomenon he described as unprecedented globally. 

He said that reforms require time and will ultimately be implemented by an elected government.

He highlighted recent support from Bangladesh Bank, which provided Tk52,000 crore to 12 struggling banks, following an earlier allocation of Tk22,000 crore. However, he cautioned that these measures are not a permanent solution.

The adviser pointed to Islami Bank as a success story, noting that confidence has been restored in this major private-sector bank. 

He also referenced the Bank Resolution Act, which ensures the government’s commitment to safeguarding depositors’ funds, though he acknowledged that resolving issues for some banks may take time. 

Technical assistance is being sought to evaluate these challenges, he continued.