WHEN country’s banking sector has been facing severe difficulties for large amount of bad loans and other scams, the High Court on Wednesday issued a directive to Bangladesh Bank to submit a list of borrowers with more than Tk 1 crore in default loans. The HC directive indeed is a remarkable effort to salvage the banking sector from the current instability. Though too late, we welcome the HC order to the central bank which itself is mired by reserve heist. Exposing the loan defaulters before the mass will be a courageous act but we doubt whether it would be possible for central bank while loan defaulters are highly influential.
The HC Bench came up with the order on the grounds that an unstable situation has been created in the banking sector and necessary steps are needed to overcome it. The court issued a rule asking the respondents to explain why their failure or inaction to stop various irregularities, illegalities and corruption in case of sanctioning of loans and waiver of interest against bank loans in the last 20 years should not be declared illegal. It also asked the authorities concerned to show causes why they should not be directed to form a commission to look into the irregularities. If the central bank authorities are really respectful to the court, it would bring some significant changes in our national financial management and banking sector.
As of September last year, default loans in the banking sector accounted for 11.45 percent of all outstanding loans at Tk 99,370 crore, the largest in Bangladesh’s 48-year history. It was obviously the failure of the Finance Ministry and the central bank. Bangladesh Bank must play a correct role to listing the big loan defaulters for the sake of banking sector’s survival. Otherwise, the nation would have to pay for it for a long time.
