Dhaka, Bangladesh (BBN)- Bangladesh Bank (BB) Governor Dr. Atiur Rahman has identified three key challenges in the country’s financial sector.
The challenges are enhancing transparency and accountability in governance of banks and financial institutions, addressing financial market gaps and deficiencies, and deepening the financial sector's integration with the global financial markets.
The central bank chief made the observations while addressing the World Bank Group’s South Asia Strategy Session held in New Delhi on Thursday.
World Bank senior director for finance and market Gloria Grandolini, and vice president for South Asia region Annette Dixon also addressed the session.
BB governor Dr. Rahman accorded highest priority to the governance of banks and financial institutions. “Our efforts thus far have been well received and well resonated in our financial sector, and we have taken up establishing a state of the art leadership excellence development center.”
The central bank chef also sought the World Bank support saying that the World Bank group can usefully support Bangladesh Bank in this effort, particularly resources and expertise needed for training of board members and top management tiers.
About financial market gaps and deficiencies, Dr. Rahman said Bangladesh's financial markets are still severely deficient at the longer term supply side. “With no long term pension/retirement savings schemes in place for general adult citizenry, banks and financial institutions are deploying short term savings into long term investments, entailing major maturity's mismatch.”
Addressing this is urgent, the central bank of Bangladesh and the Government of Bangladesh have initiated both on the supply and demand side, he added.
The BB governor also said the proposed new financial sector project with the World Bank has a long term financing window, and a work plan towards putting in place universal defined contribution retirement savings scheme supervised by a new pension funds regulatory authority. “This will go a long way in creating a long term savings pool to meet the growing needs of long term investment funds in the growing economy.”
On deepening the country's financial sector's integration with the global financial markets, Dr. Rahman said realizing Bangladesh's growth and development aspirations will require mobilization of massive investments from global markets, for which Bangladesh's financial sector will need to open up and integrate further with the global finance system.
“This entails sustained painstaking attention towards buildup of institutional and systemic strengths in the financial sector in respect of capabilities in risk management and resilience against shocks and vulnerabilities,” he noted.
In the broad and diverse agenda towards these, World Bank technical assistant and resource support for Bangladesh Bank and the broader financial sector will be very useful and much welcome, the governor added.
Besides, the central bank chief also spoke about financial inclusion campaign of Bangladesh Bank touching on 15 million ten taka accounts for farmers, social security beneficiaries, street children, school children, and cleaners.
He also elaborated on women entrepreneurs, sharecroppers being accorded innovative access to finance through various refinanced linkage programs of the BB.
BBN/SSR/AD-13Mar15-8:40 am (BST)