The Bangladesh Bank governor episode has shaken confidence in the Tarique Rahman-led government and clouded its policy direction, according to leading economists, bankers and business leaders. They say the manner of the decision signals how the government intends to govern.
The BNP government appointed sweater factory owner Md Mostaqur Rahman as governor of Bangladesh Bank on 25 February, abruptly removing economist Ahsan H Mansur. Only two months earlier, under a policy support scheme, the accounting graduate had regularised the defaulted loan of his own company, Hera Sweaters Limited.
At a time when the economy requires macroeconomic stability alongside an investment-friendly climate to recover, critics say the government’s “disorganised actions” have sent a negative signal.
Analysts also suspect possible collusion by former owners of the merged banks behind the hurried appointment. These banks were previously controlled by controversial businessmen S Alam and Nazrul Islam Mazumder. While Mazumder is in prison, Mohammed Saiful Alam (S Alam) remains abroad holding Singaporean citizenship.
First Security Islami Bank, Social Islami Bank, Union Bank and Global Islami Bank were earlier under the S Alam Group, while Exim Bank was controlled by Nassa Group owner Nazrul Islam Mazumder. After the July 2024 uprising that toppled the Awami League government, the interim administration merged these banks to form Sammilito Islami Bank.
Describing the appointment as the government’s “biggest step” since taking office, former World Bank Dhaka office lead economist Zahid Hussain told TIMES of Bangladesh: “The direction of this government will be judged by its early decisions. The signal from the governor’s appointment was not positive. This single decision has damaged certainty about the working environment and entry-exit guarantees.”
“The removal process sent an even worse signal. Even if there were objections to someone’s work, there is a procedure. Not even minimum courtesy was shown. The governor had met the finance minister the previous day,” he said.
Zahid Hussain said investor confidence would not automatically improve because the new governor comes from business. “The chaotic manner of the change has conveyed disorder. Predictability has been undermined, which is negative for business,” he said.
He also suggested the bank merger issue may be linked to the change.
“Leaving aside competence, legitimate questions will arise about conflicts of interest. There must be documented proof that the new governor has severed all business ties,” he added.
TIMES has learned that within three days of the Tarique Rahman-led cabinet taking oath, Mostaqur Rahman held a lengthy meeting at the highest levels of government, where he presented his plans.
A decision was taken on 20 February to appoint him, and the Financial Institutions Division under the finance ministry began formal work on 22 February. The process moved swiftly. On the morning of 25 February, the proposal was sent to the Prime Minister’s Office after the finance minister’s approval and cleared by noon.
Rumours of his appointment began circulating on 22 February. On 23 February, TIMES received a curriculum vitae bearing Mostaqur Rahman’s photograph, though it was unsigned.
While the process was nearing completion, Ahsan H Mansur remained unaware. He met Finance Minister Amir Khosru Mahmud Chowdhury on 24 February as scheduled and was assured that reforms would continue.
He was not told he would be removed. The following day, after seeing media reports of the appointment, he left his office. Even before the official gazette notification was issued, Mostaqur Rahman updated his LinkedIn profile to read “Governor Designate at Bangladesh Bank”, signalling nomination but not yet assumption of office.
The abrupt removal of a governor and installation of a sweater factory owner without observing state protocol triggered strong reactions from economists, bankers and social media users. The LinkedIn update also drew ridicule.
Several Bangladesh Bank officials privately expressed discomfort. Officials told TIMES, on condition of anonymity, that some had earlier opposed granting policy support benefits to Hera Sweaters. With its owner now governor, they feel uneasy.
On the same day the gazette was issued, Bangladesh Bank transferred five officials of director and additional director rank from key positions.
Experts say the episode raises clear concerns over conflict of interest.
Former Bangladesh Bank deputy governor Muhammad A (Rumee) Ali said, “There is potential conflict of interest — that cannot be denied. The new governor benefited from loan rescheduling under central bank policy support.”
Governance advocates also criticised the move. Transparency International Bangladesh (TIB), in a 26 February statement, questioned whether the new governor could control inflation, ensure financial stability and uphold governance in the banking sector free from corporate or political influence. Executive Director Iftekharuzzaman expressed concern over independence and neutrality.
“Appointing a person burdened by conflict of interest as governor of Bangladesh Bank is a clear violation of the BNP’s electoral pledge,” he said.
Policy Exchange Bangladesh Chairman M Masrur Reaz told TIMES, “Changing a governor under a political government is not unusual. But had it been handled in an orderly manner, the confidence crisis would not have emerged.”
The business community also criticised the process. Bangladesh Knitwear Manufacturers and Exporters Association President Mohammad Hatem said the previous governor’s departure was unfortunate and damaged the government’s image. The government should have acted more responsibly, he said.
However, he argued that appointing a governor from the business community could improve the business climate. “He understands existing challenges. If he receives cooperation from central bank officials, business and investment opportunities will expand,” Hatem said.
A chief executive of a multinational company disagreed. Speaking anonymously, he said global organisations maintain direct engagement with the central bank. The manner of removal and replacement has not sent a positive signal to global partners or foreign investors.
