MORE than two dozens of recommendations, including regular disclosure of identity of big loan defaulters, made by Financial Institutions Division for quickening the recovery bad loans have remained almost unheeded by the state-owned banks and the Bangladesh Bank, as per local media reports.
On April 3, the division recommended 26 short-term, medium-term and long-term measures, to be implemented in three months, six months and more than six months, for state-owned commercial banks and the central bank to quicken the bad loan recovery. It made the recommendations after examining those for seven months as widespread loan scams, growing bad loans and hostile takeover of private banks sent the banking sector into worst-ever situation.
The defaulted loans of eight state-owned banks, 40 private sector banks and nine foreign banks rose to Tk 74,303 crore in 2017 from Tk 62,172 crore in 2016. Among the short term recommendations, the division said that the state-owned banks would publish the identity of the defaulters on their web page, notice boards and or any visible place like newspapers in line with the suggestions so that general people could know them. It recommended introduction of punishment for failure to recover bad loans and reward for realising bad loans. There were several other recommendations also.
The question is why were the recommendations unheeded? If the administration is at all serious about getting the loan defaulters to behave and start giving the loans back then they should start by implementing these sensible measures to speed up loan recovery. All of these measures are essential if one expects proper behaviour from those who take loans.
But none of this has happened. This shows clearly that the government is not serious about the loan defaulters. Perhaps they have strong political connections or due to simple negligence the administration is missing out on a golden opportunity to get those who willfully default to behave. Such inaction will cost the banking sector dearly in terms of reduced efficiency and a loss of confidence in the financial institutions by the public.
On April 3, the division recommended 26 short-term, medium-term and long-term measures, to be implemented in three months, six months and more than six months, for state-owned commercial banks and the central bank to quicken the bad loan recovery. It made the recommendations after examining those for seven months as widespread loan scams, growing bad loans and hostile takeover of private banks sent the banking sector into worst-ever situation.
The defaulted loans of eight state-owned banks, 40 private sector banks and nine foreign banks rose to Tk 74,303 crore in 2017 from Tk 62,172 crore in 2016. Among the short term recommendations, the division said that the state-owned banks would publish the identity of the defaulters on their web page, notice boards and or any visible place like newspapers in line with the suggestions so that general people could know them. It recommended introduction of punishment for failure to recover bad loans and reward for realising bad loans. There were several other recommendations also.
The question is why were the recommendations unheeded? If the administration is at all serious about getting the loan defaulters to behave and start giving the loans back then they should start by implementing these sensible measures to speed up loan recovery. All of these measures are essential if one expects proper behaviour from those who take loans.
But none of this has happened. This shows clearly that the government is not serious about the loan defaulters. Perhaps they have strong political connections or due to simple negligence the administration is missing out on a golden opportunity to get those who willfully default to behave. Such inaction will cost the banking sector dearly in terms of reduced efficiency and a loss of confidence in the financial institutions by the public.
