REPORT in a national daily on Wednesday said Bangladesh Bank has become ineffective in containing defaulted loans due to immense political pressure and illegal intervention by some large business groups. It quoted a report by TIB released on Tuesday to say vested groups have not only reversed the Banking Companies Act making private banks their family business, they are also influencing appointment of governors, deputy governors and directors and influencing inspection and supervision activities to their advantage. The central bank may collapse if immediate measures were not taken.
The TIB report has said Bangladesh bank has failed to recover default loans over the past 10 years when default loans only skyrocketed to Tk 116,288 crore in September last year from only Tk 22,481 crore in 2009. But it said the real default loans now stands at around Tk 3 trillion as IMF report to raise credibility question on all about the default loans.
TIB has said the volume of defaulted loans was artificially brought down last year after the government offered relaxed restructuring and rescheduling facilities. It has only helped habitual borrowers leaving most banks and depositors unprotected. The report made startling revelation that directors of private banks have taken Tk 171,616 crore loans from their own banks on mutual understanding and restructuring loans regularly without paying bank.
It has rightly blamed the ministry of finance for holding grip on Bangladesh Bank by taking control over appointment of MDs of state owned banks and board of directors made from party men and government servants who implement government desires. A single conglomerate has taken control over 9 banks to suggest there is no rule of law and accountability in the banking sector.
Indeed the nation knows what is happening in the banking sector but instead of improving the situation it is only sinking under the control of a highly corrupt government. It is not protecting banks while powerful people are stealing funds siphoning it out of the country. TIB has therefore rightly suggested the autonomy of the Bangladesh Bank be restored and government political control must be relinquished to allow it to independently run. Moreover it suggestion to set up a banking commission is all the more important to restore discipline in banking sector.
