Governor Urges Insurance Sector to Embrace Cashless Payments

In a decisive move to modernise Bangladesh’s financial ecosystem, the Governor of Bangladesh Bank, Ahsan H. Mansur, has called upon insurance companies to transition towards a fully cashless transaction model. Speaking as the chief guest at the unveiling of the Insurance Development and Regulatory Authority’s (IDRA) new website and Digital Insurance Manual, the Governor emphasised that digitisation is no longer optional but a prerequisite for national economic growth.

The event, held at the BIAM Foundation auditorium in Dhaka, marked a significant milestone in the sector’s digital transformation. Governor Mansur revealed that the IDRA is currently drafting comprehensive guidelines to facilitate this shift, ensuring that all premium collections are processed through banking channels rather than cash.

A Departure from Short-Termism

Addressing industry leaders, the Governor delivered a candid critique of the sector’s historical performance. He remarked that the pursuit of "short-term gains" had caused the industry to lose its way, and he pledged to rebuild insurance into a "productive sector."

"If we fail to implement effective good governance, we will not see positive results," the Governor warned. He noted that while the central bank is prepared to offer extensive support, the industry must adhere to strict governance conditions. He particularly highlighted the systemic failure where funds were collected but claims remained unpaid due to insufficient liquidity or poor fund management—a practice he insisted must end.

Key Pillars of the Digital Reform

Strengthening the Regulatory Landscape

The IDRA Chairman, M. Aslam Alam, who presided over the ceremony, described the Digital Insurance Manual as a cornerstone of institutional reform. By making legal frameworks and procedural rules accessible online, the regulator aims to simplify business operations. "We are currently working on legal, digital, and institutional reforms. If these are implemented, the sector will advance significantly within five years; otherwise, existing problems will only intensify," Alam stated.

Supporting this vision, B.M. Yusuf Ali, President of the Bangladesh Insurance Forum (BIF), highlighted the importance of liquidity. He urged the Governor to ensure that insurance funds held in banks remain accessible so that companies do not default on policyholder claims.

The Macroeconomic Necessity

Governor Mansur concluded by linking the health of the insurance sector to the broader economy. Currently, the insurance penetration rate in Bangladesh remains low. He argued that unless the market expands to cover a wider array of assets—both movable and immovable—the nation’s Gross Domestic Product (GDP) growth would remain artificially constrained.

The message from the central bank is clear: the future of Bangladeshi insurance lies in transparency, accountability, and the seamless integration of digital finance.