THE country’s banking sector nosedived further in 2018 with the sharp rise of default loans in 14 banks. Despite entrapped in loan crisis over the years, the regulatory body willfully failed to restore discipline in the sector, letting billion of taka to default basically for political lineage. As the banking system in the country becomes corrupted due to the intrusion of politics, impunity, and the unwillingness of authorities concerned, the further negative rise of default loan will put the sector in disaster. We urge the regulatory body Bangladesh Bank to do their statutory duty vying all fear and favour to restore the banking sector and the economy as well.
Professional bankers have attributed the sector’s declining health to poor lending practices and politically-influenced loans. The 14 banks are Janata, AB, Islami Bank Bangladesh, Modhumoti, National, NRB, NRB Global, Shahjalal Islami, Social Islami, South Bangla Agriculture and Commerce, Farmers (now Padma), Trust, Union, and Meghna. According to the central bank, Janata Bank accumulated the highest volume of default loans amounting to Tk 11,406 crore, taking the total to Tk 17,225 crore. The non-performing loans (NPLs) went up by Tk 19,608 crore last year and Janata Bank was solely responsible for 58 per cent of the increase. The central bank has discovered that the state lender had disbursed a large number of loans to Crescent and AnonTex groups, violating rules. A major portion of the loans has recently turned bad, putting it in a precarious situation. The non-performing loan of Farmers Bank, which has recently been renamed as Padma Bank, rose 340 per cent year-on-year to Tk 3,184 crore last year. The default loans at Trust Bank surged 164.50 per cent year-on-year to Tk 1,529 crore last year.
Bangladesh Bank is yet to take any effective step to restore the corporate governance in the banking sector though criticism poured in the Parliament among the ruling MPs and the oppositions over the issue. The management and Board of Directors should be brought under strict discipline in order to ensure sound financial health of the banks.
