FROM PAGE B1

Some Islamic banks, including Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Union Bank and Global Islami Bank are facing severe liquidity crises.

These Islamic banks are faced with a deficit in their current accounts with the central bank but the banking regulator continues to provide liquidity support to them without any collateral, central bank documents showed.

The banking sector has also been contending with a US dollar crisis for more than two years due to higher outflows than inflows of foreign currency.

In a big example of weak central bank governance, the BB recently bypassed its own rules in approving the appointment of Mohammad Shah Alam Sarwar as the strategic adviser of IFIC Bank.

The central bank gave the special permission following an application from the board of the private commercial lender aimed at employing its former managing director as an adviser. This contradicts the central bank’s rules.

As per rules, a bank’s managing director or any official of up to two levels immediately below the managing director cannot be appointed as an adviser or consultant by the same lender until five years have passed after retirement, discharge or expiry of a contract.

Sarwar’s tenure as managing director and CEO of the bank ended on May 13 this year.

Industry insiders also said the lending rate cap, introduced by the central bank in April 2020 in the open market economy, was another example of the regulator’s lack of autonomy as it apparently came about following pressure from the government.

Another former finance minister, Abul Maal Abdul Muhith, hinted at forming the country’s first banking commission in his budget announcement for the 2015-16 fiscal year. However, there was no further discussion regarding that topic after FY20.

Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), during a dialogue recently said an independent banking commission was needed to ensure good governance in the sector.

She added that a goal-specific, time-bound, inclusive, transparent, unbiased and independent citizen’s commission on banking should be set up to bring transparency to the sector.