Capital market reforms in two months: Khosru

Finance and Planning Minister Amir Khosru Mahmud Chowdhury has pledged reforms in the financial sector and said there would be no more political appointments in banks, regulatory bodies and other financial institutions.

Speaking at a policy symposium on the post-uprising economy and budget expectations today, he said the government was preparing major reforms to restore confidence in the banking sector and capital market.

“There is not going to be any political appointment,” he said. “Professional people will be working there.”

The decision would apply across the financial sector, including the Bangladesh Securities and Exchange Commission (BSEC), he said at the event organised by the M Saifur Rahman Smriti Parishad at Le Méridien Dhaka.

“In the next two months, you will see changes in the capital market,” he said. “We will have to do all the deregulation necessary for the capital market.”

He said poor financial reporting and weak auditing standards had contributed significantly to corruption and instability in the financial system.

“Financial reporting in Bangladesh is unfortunately in a very bad shape,” he said.

According to him, the lack of proper audits and reliable financial statements had affected everything from bank financing to the capital market.

“The looting that happened in banks — financial reporting is somewhat responsible for that,” he said. “If financial reporting is not proper and auditing is not proper, then the true reflection of a company’s accounts is not there.”

He said foreign institutional investors would not invest in Bangladesh unless they had confidence in the country’s auditing standards, balance sheets and corporate disclosures.

Khosru also acknowledged deep weaknesses in the banking sector, saying many banks were undercapitalised and burdened by large volumes of non-performing loans.

Without naming any specific banks, he criticised the lavish lifestyles of sponsors of some banks despite the poor condition of their institutions.

Khosru said the government had already engaged international organisations, including the International Finance Corporation, as well as foreign investment banks and fund managers to help address capital shortages in the sector.

He stressed that Bangladesh would have to open up its financial sector to international investors because local financing and management alone were no longer sufficient.

“Local financing is not enough, local management is not enough. We have to open up,” he said.