Experts at a roundtable here on Thursday stressed the need for ensuring good governance and enhancing Bangladesh Bank’s monitoring and recruiting honest and competent people to top positions to restore discipline in the banking sector and check plundering.
They also observed that the incidents of big scams are taking place in the sector due to the prevailing culture of impunity. Shushashoner Janney Nagarik (Shujan) arranged the roundtable titled, ‘Steps need to be taken to establish good governance in banking sector’, at the Jatiya Press Club. Lack of good governance in the banking sector, especially in state-owned banks, is serious, said former caretaker government adviser AB Mirza Azizul Islam. “Normal banking indicators, let alone the big scams, have exposed the lack of good governance in the sector,” he noted. Citing an example, he said though the proportion of non-performing loans is 3 or 3.5 percent considered standard globally, it was 21.9 percent in the country’s state-owned banks in 2015 for lack of good governance.
The veteran economist also said expenditure-income ratio in the state-owned banks is 85.9 percent which is very high as globally accepted standard is 50 percent. “It means banks are expending around 89 percent of its total income.” Mirza Aziz also said the Bangladesh Bank should properly use its power of autonomy without bowing down to any political pressure and interference to bring back discipline and establish its strong monitoring in the banking sector. “It’s a big matter as to how much the central bank is using its power. It won’t work if only an institution is given huge power. Appropriate people will have to given appointment to use this power properly. The people who will be installed in the top posts must be freedom-loving, honest, skilled and capable ones. Or else, we won’t get benefit,” the economist observed.
He suggested giving importance to improve the bank’s credit risk management system, ensuring transparency in internal audit, monitoring and supervision and ensuring prompt trial and visible punishment of those involved in scams and irregularities to restore good governance in the banking sector.
Besides, Mirza Aziiz also advised to strengthen Artha Rin Adalat in a bid to reduce the backlog of cases and help increase the proportion of recovery of loans. “Both curative and preventive measures are necessary for the sector.” He also suggested strengthening cyber security by engaging experts and enhancing skills of the existing people by taking necessary steps, including imparting training. Bangladesh Bank’s ex-governor Dr Salehuddin Ahmed said if the finical sector lacks discipline, the other sectors will be badly affected and the nation will not be able to get proper benefit from the GDP growth.
He said, the government should establish a balanced control, not too strict or not too flexible, over the banking sector to keep it on the track. Mentioning that the rules and norms of the country’s banking sector are of highly standard, the ex-governor said proper enforcement of those is crucial to ensure discipline in the sector.
He also said the central bank should enhance its monitoring on the banks using its huge power.
Stating that the main task of the central bank is risk taking and bank control, Salehuddin said it has moved back a bit from its core tasks in recent years by giving importance to some development issues.
He said the culture of impunity has been working as incentive for those involved in the swindling in the sector and encouraging them to repeat the incidents. Ex-Agrani Bank managing director and economist Syed Abu Naser Bakhtiar Ahmed in his keynote paper said around Tk 30,000 crore thousand has been plundered through the six big scams in the banking sector over the last seven years. “Huge people were affected with the swindling incidents. But, no one is tried for those incidents.” He said the growing incidents of various irregularities, corruption and plundering in the banking sector are obstructing the country’s desired development.
Former caretaker government adviser M Hafizuddin Khan, Dhaka University Prof and capital market expert Prof Abu Ahmed, Gonoshasthaya Kendra founder Zafrullah Chowdhury and Sujan general secretary Badiul Alam Majumder, among others, spoke at the programme.
