Cenbank assures foreign banks of policy continuity under new governor

The central bank has assured foreign correspondent banks that there will be no policy changes under the new governor and that it will clear dues with the five merged banks.

The Bangladesh Bank made the assurances at a meeting yesterday with representatives of eight international banks. The meeting, presided over by Deputy Governor Md Kabir Ahmed, was called on the instructions of new Governor Md Mostaqur Rahman.

A senior central bank executive said the meeting followed informal information that two foreign banks had cut credit lines with local banks after negative media coverage over the recent unrest at the central bank surrounding the previous  governor's removal.

The central bank at the meeting assured the banks that existing reforms would continue and that there would be no policy shift, he added.

It also confirmed that it would clear $150 million in dues pending for a year with five merged banks, using government-provided funds, and promised to take strict action if any bank delays foreign payments. Any such delays would be settled by deducting from accounts held with Bangladesh Bank.

The executive said negative media coverage surrounding the recent incident over the removal of the previous governor had damaged the central bank's reputation, eroding correspondent banks' confidence. 

Bangladesh Bank is seeking to restore its credibility through such meetings, he added.

The government recently appointed Md Mostaqur Rahman, a garment exporter, terminating the appointment of Ahsan H Mansur, who is widely respected internationally. This marks the first time a businessman has become governor, attracting criticism from industry, media, and social platforms.

Some central bank officials also protested Mansur's merger decisions and held a press conference against him, causing further reputational damage.

Previously, foreign correspondent banks had reduced credit lines for Bangladeshi banks following a country rating downgrade, which has not yet been fully restored, potentially affecting foreign business. 

Some banks also lost credit lines due to unusual defaulted loans, although strong banks have recently faced no difficulties in securing foreign credit.

In early 2024, both Moody's and Fitch downgraded Bangladesh's rating due to external vulnerabilities, liquidity risks, declining forex reserves, and uncertainty over the crawling peg.

However, the forex market has stabilised over the past six months, with reserves rebuilt by over $12 billion to more than $30 billion, sufficient to cover more than four months of imports. The central bank's reserves now exceed the international requirement of three months' import coverage.

Defaulted loans, which peaked at 36% in September 2025, fell to 30% in December and are expected to decline gradually as the central bank continues rescheduling loans to support businesses.