Written by The Banking Post
The government has taken the initiative to transform Bangladesh Bank into a constitutional institution. Instead of the existing Bangladesh Bank Order, 1972, a new law titled “Bangladesh Bank Order, 2025” is being drafted. This aims to grant full autonomy and independence to the central bank. Under the new structure, Bangladesh Bank will be accountable only to the National Parliament. Parliamentary approval will be made mandatory for the appointment and removal of the Governor and Deputy Governors.
No government bureaucrats will be included in the Bank’s Board of Directors. Instead, the board will consist of independent members with knowledge and experience related to the banking and financial sector. These members must have at least 15 years of experience in economics, banking, accounting, commerce, industrial risk management, or law. The government will appoint the board members from a shortlist proposed by the Governor.
The draft proposes upgrading the Governor’s status to that of a Cabinet Minister. Currently, the position is classified under grade-14, which is below the Cabinet Secretary and Principal Secretary in rank. According to the draft, both the Governor and Deputy Governors will be appointed for six-year terms, renewable once. Before taking office, they will have to take an oath before the Chief Justice of the Supreme Court.
A senior official of Bangladesh Bank stated that the lack of autonomy has led to major fraud and irregularities in the banking sector. State-owned banks have long faced criticism for dual control. Once the new law is enacted, Bangladesh Bank will have sole authority for the supervision and regulation of all banks.
Dr. Zahid Hussain, former Lead Economist at the World Bank’s Dhaka office, believes that the central bank currently operates like a department of the government. He said that giving it constitutional status alone is not enough—what matters most is the process for appointing the Governor. He stressed the importance of a search committee to select qualified candidates, and that the appointment must require parliamentary approval rather than being under the sole discretion of the Prime Minister.
Under the new structure, the Governor will be the Chief Executive Officer of the central bank. He will have the authority to make decisions independently in areas not under the jurisdiction of the Board of Directors. To assist him, there will be an Executive Advisory Committee comprising the Deputy Governors and senior executive directors. However, decision-making power will rest solely with the Governor.
A “Coordination Council” will be formed to align monetary and exchange rate policies. The council will be chaired by the Finance Minister and include the Governor, Commerce Minister, Planning Minister, and the Secretary of the Finance Division as the Member Secretary. Before each national budget, the council will evaluate macroeconomic factors and help determine the government’s borrowing and spending plans.
According to the new order, Bangladesh Bank will also be given mandatory bank resolution authority. A special division will be created to identify vulnerable banks early and take timely corrective action. To maintain financial stability, the central bank will be empowered to act immediately in case of capital shortfalls or administrative weaknesses.
The government aims to issue the new law or ordinance and start implementation by December 2025. The draft has been finalized under the leadership of Saker Siddiqui, a former official of the U.S. Federal Reserve and now an advisor to Bangladesh Bank. It will soon be sent to the Prime Minister’s Office for review.
