THE authorities in the country’s eight state-owned commercial and specialized banks seem to be hell bent on appeasing the loan defaulters rather than punishing them. Yet again, this time, they have exempted borrowers from paying around Tk 4,000 crore interests on loans.
Strangely, the government has not come up with any measures so far to punish the wilful defaulters and improve the governance system in banks. Rather, the government is filling capital shortfall of the banks with the people’s tax money. So far, Tk 17,000 crore has been injected to the banks’ capitals from the budget (FY 2011-12 to 2018-19).
Meanwhile, economists and banking experts criticized the move pointing out that it will jeopardize the banking sector and the national economy as well. Good borrowers will be discouraged to repay their loans while habitual defaulters will continue to enjoy immunity for their delinquency. Not only that, the defaulters can also get fresh loans. Thus, the defaulters have the last laugh.
According to a report in a national daily, from January 2019 to February this year, the amount of interest waived by the state-owned banks was more than 300 per cent from the sum they granted in 2018. With this amount, these banks have exempted bad borrowers more than Tk 14,560 crore in interest in the last 10 years.
Economists said such an exemption, by any level, is immoral and discouraging for good borrowers. Simultaneously, it will also encourage intentional defaulters not to pay the interest accrued on their loans, thinking that they will be given the opportunity in the future. Even the men who led the looting of state-owned banks, particularly BASIC Bank, were not brought to the book.
In this context, they said influential borrowers got their interest waived during rescheduling of defaulted loans. The amount of waived interest grew following the rescheduling facility in 2019 upon 2 per cent down payment awarded to defaulters. The defaulters are either involved in various levels of the government or take help from the powerful section of the government.
Since rise in default loans tightens banks’ liquidity, eats up profitability, increases cost of funds, reduces investment capacity and disturbs the transmission mechanism of monetary policy and overall macroeconomic stability, the government must come up strongly to stop the country’s staggering bad loan default culture once and for all.
