Without an independent, depoliticised central bank, Bangladesh will struggle to get a hold on its economic situation

When governments interfere with monetary institutions, the public–and the economic purse–eventually pays the price. In Bangladesh, that price is now showing up in persistent inflation, currency instability, and growing fears around the country’s financial future. The latest alarm bell came from economist Dr Fahmida Khatun, who warned earlier this month that Bangladesh Bank’s lack of independence has crippled its ability to steer the economy. Her remarks have renewed a long-running debate over political interference at the highest levels of the financial system and questionable actions that have ensnared some of the country’s most important businesses and dented investor confidence.

The case for central bank autonomy is clear. When monetary authorities can make technical decisions without fear of political reprisal, they are more likely to act in the long-term interests of the economy. But when a central bank becomes an instrument of political control and personal interests, credibility erodes, and the country’s financial foundations begin to crack.

Since the ousting of former Prime Minister Sheikh Hasina last summer, critics say the interim government has used the Bangladesh Bank to pursue politically motivated agendas, including what some describe as targeted financial repression. The appointment of Ahsan Mansur as central bank governor has raised particular eyebrows. Mansur, once considered a respected economist, now finds himself at the centre of multiple controversies, from erratic policy remarks to troubling questions about his conduct in office.

The warning signs emerged early, after initial hopes that Mansur might stabilise the country’s financial system. In September 2024, Mansur made off-the-cuff remarks to reporters suggesting the central bank might not intervene to defend struggling banks and the taka even amid steep depreciation. The market’s response was swift: the currency slipped further. The Daily Star called his remarks “unfiltered” and said they lacked the caution expected of a central banker. Investors, already on edge, took note.

In April 2025, Bangladesh Bank abruptly halted the issuance of already-printed currency notes featuring the image of Sheikh Mujibur Rahman, the nation's founding father, causing a currency crunch as the notes went unused. Bank officials were unwilling to discuss the matter publicly, with the timing and lack of transparency prompting widespread public anger, while the move to remove Rahman’s image from circulation deepened concerns about whether the institution was being politicised.

But the problems at Bangladesh’s central bank go far beyond unguarded statements and bank notes. Under Mansur’s leadership, Bangladesh Bank has become embroiled in disputes that raise deeper concerns about transparency, accountability, and potential conflicts of interest. One controversy involves Nagad, a mobile financial services platform widely credited with improving financial inclusion and government payment delivery. According to media reports Mansur has faced allegations of regulatory bias and conflict of interest linked to actions taken against Nagad and its founder, Tanvir A Mishuk. Before his appointment as governor, Mansur chaired BRAC Bank—the parent company of bKash, Nagad’s chief rival—and critics argue that this prior association may have influenced some of his subsequent decisions at the central bank. Reports allege that he personally approved the awarding of a forensic audit of Nagad’s accounts to KPMG India, bypassing lower bidders and raising questions about due process and procurement transparency. The central bank and the Anti-Corruption Commission have yet to publicly respond, but the optics are troubling: as one investor quoted in RepublicWorld.com put it, “If this can happen to Nagad, no startup in Bangladesh is safe.”

Scrutiny has also intensified around Mansur’s own financial affairs. In March, Daily Republic reported that Mansur’s daughter resides in a $3.7 million apartment at Dubai’s Palazzo Versace. The governor has denied any impropriety and insisted that his daughter bought the apartment herself, but the optics are troubling—especially given the mounting economic hardship facing ordinary Bangladeshis. The same outlet noted that between September 2024 and May 2025, Mansur made nine overseas trips to as many countries, spending 65 days abroad, including 27 days in the United States and five in Dubai. Since taking office, he has spent 91 days on official holidays and 65 abroad, leaving just 128 days worked in his office out of 284. In a period of profound financial crisis, this record of absenteeism alone sends a worrying message.

While denying any wrongdoing, Mansur and other senior officials in the interim government have repeatedly shifted blame onto the previous Awami League administration. Yet, as critics point out, these same officials are now themselves accused of self-enrichment and institutional damage. As one Daily Republic editorial asked, “Who is really plundering public trust?”

The economic consequences of the governance problems at the central bank are already evident. Inflation remains high, having stayed in double digits for much of the past three years. Non-performing loans now account for more than 24 percent of all disbursed loans. In the case of state-owned banks, the figure is even higher—over 45 percent. Asset Quality Reviews have shown that several Shariah-based Islamic banks are so compromised that their entire portfolios may be at risk. In this environment, the central bank’s ability to project stability is critical—but today, its leadership appears to be part of the problem.

This erosion of independence also intersects with Bangladesh’s broader governance and rule of law crisis. The case of the S Alam Group is a stark example. In October, the family behind one of the country’s largest conglomerates filed a case at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), accusing the government of orchestrating a “targeted campaign of arbitrary asset freezing, confiscation and value destruction” designed to damage their international standing. While the case will be settled through arbitration, the allegations point to a troubling pattern of using financial institutions, including Bangladesh Bank, as instruments of political punishment.

To restore confidence, Bangladesh must implement a clear separation between its political leadership and its monetary institutions and carry out necessary reforms to ensure that appointments are made through independent search committees and monetary policy decisions are based on data, not on party loyalty. Additionally, communication with the public must be transparent and rigorous.

Institutional independence does not mean a lack of accountability. On the contrary, the central bank should be required to publish detailed reports on its decision-making, budget, and financial exposures. But it also must be protected from political interference, especially regarding sensitive areas like interest rates, currency management, and bank supervision.

Ultimately, the future of Bangladesh’s economy depends on the integrity of its institutions. A central bank that bends to political pressure cannot fulfill its mandate, nor can it defend the savings of ordinary citizens against inflation, corruption, and volatility.

(The views, opinions, and claims in this article are solely those of the author’s and do not represent the editorial stance of The Assam Tribune)