Abrupt ouster of Ahsan H Mansur draws sharp criticism

The government’s abrupt cancellation of Ahsan H Mansur’s appointment as governor of Bangladesh Bank (BB) yesterday has drawn sharp criticism from stakeholders, including economists and bankers.

The manner of his departure, without prior notice and amid protests by a faction of central-bank officials, has raised more eyebrows than the decision itself.

Mansur was appointed in August 2024 for a four-year term until 2028 by the interim administration that followed the ouster of Sheikh Hasina’s government.

Mansur said he was not informed by the high-ups of the government in advance. He learned of his replacement from television news and later left the office

Speaking to The Daily Star, Mansur said he was not informed by high-ups of the government in advance. He learned of his replacement from television news and later left the office.

Economists and analysts said Mansur’s tenure coincided with a period of economic strain. Foreign-exchange reserves had fallen sharply, the taka was volatile and import pressures were mounting.

Supporters credit him with attempting to steady the macroeconomic situation–  rebuilding reserves, easing exchange-rate distortions and initiating long-delayed banking reforms. These included nudging weak banks towards mergers, tightening governance and pushing for the creation of an asset management company to deal with bad loans.

The reforms signalled an effort to restore discipline in the sector.

M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, called the abrupt leadership change at BB “institutionally troubling”.

An elected government, he noted, has the authority to appoint and dismiss leadership at the regulatory institution. But the timing and process matter. “Central banks, especially in crisis periods, require strong technical expertise and strategic understanding.”

Reaz described the former governor as an effective policymaker who helped stabilise macroeconomic fundamentals, advance bank mergers, reform the Money Loan Court framework and push for an asset management company.

He cautioned that the departure of a technically competent governor may send negative signals about institutional stability.

Meanwhile, in a social media post yesterday, Md Deen Islam, an economics professor at the University of Dhaka, said, “Bangladesh appears to be sliding backward. What happened at Bangladesh Bank today is alarming, and the government’s response raises even more serious concerns.”

He described the change in leadership as alarming and questioned the appointment of a garment industrialist – and standing committee chair of the Bangladesh Garment Manufacturers and Exporters Association – as governor.

“Regardless of his experience, the conflict of interest is obvious. How can Bangladesh Bank remain independent if it is led by an active business figure from a sector it must regulate?” he questioned.

Islam said he had criticised Mansur in the past, particularly for his communication failures. “But to be fair, he also took important steps to address the massive banking irregularities we witnessed under the previous regime.”

“Bangladesh cannot afford to repeat the mistakes of the past. Institutional independence is not optional; it is essential, and it has to start with appointing the right people with the right skills,” Islam added.

A managing director of a private commercial bank, on condition of anonymity, said the most disappointing aspect is that Mansur could have been given a more dignified farewell. “If our foreign business counterparts ask us questions, what answer will we give? This has now become an issue.”

Selim Raihan, executive director of South Asian Network on Economic Modeling (SANEM), framed the episode more starkly: does the government genuinely intend to reform the banking sector?

“A central bank is not merely a policy-making body; it is also the regulator and supervisor of commercial banks,” he noted.

A businessperson’s instinct may lean toward prioritising market and corporate interests, whereas the primary responsibility of a central bank governor is to control inflation, ensure financial stability and take firm action against weak and irregular banks, he said.

Raihan added that with the banking sector already burdened by high non-performing loans, governance weaknesses and political influence, transparency, professional independence and regulatory experience should have been key considerations.

Referring to the outgoing governor, he said efforts were made to introduce important reforms, though not all methods were universally accepted.

He alleged that the former governor lacked adequate support from the interim government, which may have made some decisions appear controversial.

Birupaksha Paul, a professor of economics at the State University of New York, said Mansur, as BB governor, was highly qualified, and his replacement under the new BNP regime was not quite surprising.

He observed that since the amendment of the Bangladesh Bank Order, which is expected to grant BB greater autonomy, was yet to happen, the selection of the governor still hinges on the choice of the finance minister, who wants to have a colleague conducive to carrying out his agendas.

He argued, “The new governor must work as an economist and a strong regulator without any bias toward particular groups or quarters while ensuring broader national interests of employment, growth and low inflation.”

“Nothing can be predicted right now about how the new governor will handle the beleaguered banking industry and address the mountains of defaulted loans,” he added.