Newspapers Can Help Authorities to Establish Transparency and Integrity

 

When people find that banks and financial institutions regularly get involved in unethical practices and scams, they get scared and start to lose confidence on banking and financial systems. In this post-pandemic period and global geopolitical hazards, regaining people's confidence on the banking sector is essential to save Bangladesh's economy from further perils.

Up to the end of September 2022, loans of 16 lakh 29 thousand 735 crore taka were distributed by the banking sector of Bangladesh. Out of this amount, 1 lakh 36 thousand 440 crore taka has become defaulted loans which is nearly 9% of the total disbursed credits. However, unofficial sources have reported that there are defaulted loans of around 2 trillion taka including written off debts. Such high figures of defaulted loans have put the country's banking arena in a pessimistic plight.

High Court has recently ordered banks and financial institutions to publish on their websites the names and particulars of the individuals to whom they pay loans. Moreover, High Court remarked a few months ago that the country's most heinous crimes are being committed in the banking sector.

Bangladesh Bank has meanwhile identified ten weak banks. The central bank has also appointed observers in Islami Bank Bangladesh Limited and First Security Islami Bank after reports about irregularities regarding loan disbursement came up about these two particular banks.

A number of Islamic banks borrowed 5,250 crore taka from Bangladesh Bank a few days ago as liquidity support. Liquidity crisis happens in banks when clients withdraw their deposits. At present 10 banks in the country are operating according to Shariah - a body of religious law that forms a part of the Islamic tradition. These ten Islamic banks are Islami Bank Bangladesh Limited, ICB Islamic Bank, Al-Arafah Islami Bank, Social Islami Bank, Exim Bank, First Security Islami Bank, Shahjalal Islami Bank, Union Bank, Standard Bank and NRB Global Bank.

Reportedly Dhaka Bank, AB Bank, Exim Bank, IFIC Bank, NCC Bank, Pubali Bank, Social Islami Bank, Union Bank and Uttara Bank have faced huge losses because of not being able to recover defaulted loans. On top of that, the extent of defaulted loans is getting more and more augmented in these banks.

Besides private banks, state-owned banks are also in dire straits with defaulted loans. The sums of outstanding defaulted loans in Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Basic Bank and Bangladesh Development Bank Limited are 68 thousand 557 crore taka, 69 thousand 297 crore taka, 61 thousand 278 crore taka, 37 thousand 449 crore taka, 14 thousand 015 crore taka and 2 thousand 128 crore taka respectively.

The harsh economic impact of Covid 19 pandemic is not yet over. On top of that the Russia-Ukraine War has hammered global economy including Bangladesh. Under these circumstances, if banks fail to function properly, it will cast a disastrous effect on Bangladesh's economy.

The banking and financial sectors suffered most during the immediate past Governor of the central bank from 2016 to 2022. There is extreme lack of good governance in banks. 

Even some banks appoint directors in their boards without seeking approval from Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank.

Economists have stated that only establishing good governance, accountability and transparency can save Bangladesh's financial and banking sectors. Not just banks, non-bank financial firms, stock markets and insurance companies should be streamlined too. Bangladesh Securities and Exchange Commission (BSEC) and Insurance Development and Regulatory Authority (IDRA) have certain roles to play for this purpose.

The authorities concerned should work hard to constitute good governance and accountability in the banking sector. At the same time it is essential to keep banks away from political influence.

Bangladesh's banking sector has gone into the clutches of financial perpetrators. Some of them are so influential that the regulators cannot take any action against them.

The central bank and other regulatory institutions should carry out firm and uncompromising drive to recover defaulted loans to sustain the country's banking sector.

Financial regulators should compel banks and financial institutions to comply with all codes and rules. Stern actions should be taken if there is any violation of financial principles.

The whole world including Bangladesh is now going through a very tough and complicated situation. Keeping banks and financial institutions on the right track is indispensable at this moment.

The regulatory authorities should not compromise with any bank or financial institution in case of graft and anomalies.
 

PR Biswas is a Senior Staff
Correspondent of The Asian Age.