Bangladesh Bank governor Ahsan H Mansur on Tuesday said that the central bank would no longer support struggling banks by printing money.

He made this declaration during a press conference at the central bank’s head office in Motijheel, Dhaka, following a meeting with business leaders.

Mansur emphasized that using newly printed money to prop up weak banks is not a sustainable solution.

The central bank had previously injected over Tk 14,000 crore into six banks controlled by the S Alam Group through money creation.

He also addressed rumors about demonetizing the 1,000-taka note, clarifying that there are no such plans.

Mansur mentioned that the central bank is considering the dissolution of boards at struggling banks.

He indicated that past failures at Sharia-based banks would necessitate a different approach to their rescue.

To prevent further fund withdrawals by potential wrongdoers, measures have been implemented.

Mansur assured that weak banks would be either merged or reduced in number following the formation of a banking commission, but no banks would be closed.

He affirmed depositors’ rights to withdraw their funds, stating that the government would not interfere with their decisions.

He held bank management accountable for the current issues and ruled out any further assistance for these banks.

During the meeting, a delegation led by the Federation of Bangladesh Chambers of Commerce and Industry President Mahbubul Alam sought clarity on the government’s position regarding fragile Islamic banks.

Mansur assured that any wrongdoing by central bank officials or others would be addressed.

The governor highlighted that the central bank is taking time to make careful decisions rather than rushing into potentially flawed actions.

He announced that the formation of a banking commission would be declared within the next two to three weeks as part of efforts to address ongoing issues in the banking sector.

Mansur also addressed inflation, stating that the current monetary policy is effective and would be tightened further, though moderately.

He anticipated that inflation would decrease over the next seven to eight months, eventually reaching 5-6 percent.

Regarding concerns about the lower flow of funds to businesses, Mansur noted that printing money would not solve the problem.

Instead, he emphasized the need for deposit mobilization. Improved liquidity and foreign currency flows should lead to increased deposit growth, which in turn would enhance loan availability.

Mansur also called on the government to reconsider its plans to borrow large sums from banks to fund the budget.

He mentioned the central bank’s intention to reduce the loan default classification period from 180 days to 90 days, though business leaders have expressed concerns about the impact of this change on non-performing loans.