Bangladesh Bank (BB) is going to withdraw its observers from the commercial banks. Economists have said that this is how BB has proven that it is subservient to the influential loan defaulters.
Mega loan defaulters and bank owners have built up a vicious syndicate. Bangladesh Bank has over and over again failed to take strong measures against the powerful loan scammers. As a result there is no good governance and accountability in the country's banking sector.
Bangladesh Bank has the authority to appoint observers in the commercial banks to mitigate anomalies. Observers are authorized to stay in the boards of directors of the concerned banks. They are also empowered to attend necessary meetings with the top management of the banks to ensure integrity.
However, as the central bank is going to withdraw observers, now the magnitude of corruption and irregularities in banks will further increase according to the worries of financial experts.
There are BB observers in 14 banks. In the meantime observers from two banks have been removed. Influential loan borrowers and a few higher government officials have reportedly compelled Bangladesh Bank to do so. Loan scams and financial anarchy have broadly affected the banking arena of Bangladesh.
Defaulted loans have increased severely in most of the state-owned and private banks. At present there are defaulted loans of nearly 1 lakh 44 thousand crore taka including written off debts.Bangladesh Bank's former Governor Dr. Salehuddin Ahmed has said that it is not right to withdraw observers from banks yielding to the pressure of influential clients. It will jeopardize Bangladesh Bank's autonomy, he further said.
Currently, there are observers in Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Basic Bank, Bangladesh Krishi Bank, Bangladesh Development Bank, ICB Islamic Bank, Bangladesh Commerce Bank, Islami Bank Bangladesh Limited, National Bank, Padma Bank, NRB Commercial Bank and AB Bank.On the other hand, Bangladesh Bank's Executive Director and spokesman Sirajul Islam has told media that it has not been yet finalized whether observers would be withdrawn or not.
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