Published:  12:40 AM, 14 September 2018

Soaring defaulted loans

Irregularities in Bangladesh's banking sector have been there for quite a long time now. However, in the last one decade, the sector, particularly the state-run commercial as well as specialised banks, has been led to a somewhat dying situation.

Wrongdoing at the management level coupled with unresponsiveness from the regulatory authority and the government as well have brought the state-owned banks to such a state that they are now kept alive through what many people call 'spoon feeding'-- injection of fresh capital from tax payers' money.

The government, over the last several years, has provided the banks with thousands of crores of Taka by making budgetary allocation in order to replenish their capital shortfall they are suffering from due to various mega forgeries in recent times.

But the government's efforts to revitalise the state-owned banks has not yielded any noteworthy improvement as yet. What is more, all the state-owned banks, both commercial and specialized, are struggling in the vicious cycle of bad loans. Finance minister AMA Muhith's revelations on Wednesday have brought the issue to the fore once more.

The finance minister informed the nation that defaulted loans, including non-performing and written-off loans, stood at Taka 131,666 crore at the end of June this year. And we are little surprised to learn that nearly 43 percent of this staggering amount that is equivalent to 73 percent of the country's development budget in the ongoing fiscal year are at five state-owned bank.

Muhith also revealed the names of top 100 defaulters in the country. The list indicates that the top defaulters are politically influential persons and they, despite having a track-record of non-payment, are protected by the political system and due to their closeness to power centre banks often cannot initiate a successful recovery process.

However, this pitiable state of affair gives only one indication. This is that there is a serious lack of good governance in the sector. The government, or its relevant organs, cannot deny its responsibility for this deplorable situation. We have seen the government has shown reluctance to bringing the perpetrators, especially the naughty high-ups at the banks, to book.

Despite repetitive calls from various quarters to strengthen the central bank by amending the Banking Company Act so that it can take measures against the corrupt directors, the government has not taken any effective step in this regard.

We also feel the government should take immediate steps to conduct probes into the irregularities and punish whoever found guilty. This is very important in bringing back a sense of accountability among the bank high-ups. The evil trend of surge in loan defaulting can be held back by establishing discipline in the banking sector.

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