Take over assets of local East India companies: Farashuddin

Former Bangladesh Bank governor Mohammad Farashuddin has called for the state to take control of the assets held by local corporate groups he likened to "East India companies", claiming they have captured key levers of the economy and must now face justice.

Speaking on Tuesday at the launch of the July-August edition of Monthly Macroeconomic Insights in Dhaka's Banani, Farashuddin said Bangladesh Bank has already identified around 10 to 15 such groups. "These groups took control of banks. Bangladesh Bank has flagged them. Now they must face consequences," he said, urging the government to not only seize their assets but formally bring them under state ownership.

He argued that when political and economic power become one and the same, "East India company-style" entities are born, reports bdnews24.com.
"Seizing their wealth is not enough -- those assets must be reclaimed into public accounts."
Earlier in the programme, Policy Research Institute's Chief Economist Ashikur Rahman presented the main paper, highlighting concerns over the influence of such corporate entities.

He warned that they had previously brought the country's economy to the "brink".
Without preserving the independence and integrity of institutions like the central bank, he cautioned, "new East India companies will continue to emerge."

When asked how the government should respond to the rise of these powerful groups, Farashuddin said they must be punished and their grip on the system dismantled through structural reforms.

On bank consolidation, he recalled that similar initiatives in the US during the 1980s had produced little result.
"I'm not personally in favour of bank mergers," he said.

"But in Bangladesh, mergers are now a reality. I backed a fast-tracked approach the last time. The current leadership in the banking sector is honest and competent -- I hope they'll carry it out effectively."

Farashuddin also took issue with the practice of freezing bank accounts belonging to relatives of the suspects.
"If a man is corrupt but his wife or children are financially independent, why freeze their accounts?" he asked.
"It sets a bad precedent and damages public trust in banks."

He urged the government to be selective in such actions. "If 10 to 15 names have surfaced, then limit the freeze to them."
To bring down non-performing loans, he recommended listing all state-owned banks -- except Sonali Bank -- on the stock market.
He also stressed that scheduled banks should no longer issue long-term loans, saying this "distorts" the financial system and prevents the capital market from taking root.