A recent assessment by the Centre for Policy Dialogue (CPD) sheds light on the alarming state of Bangladesh’s banking sector, revealing a staggering amount of Tk92,261 crore stolen through 24 major scams since the fiscal year 2008-09. CPD Executive Director Fahmida Khatun disclosed this unsettling figure during a press briefing on December 23, cautioning that the total loss might surge even higher if smaller irregularities, such as loan write-offs, rescheduling, and court stays, were considered. Khatun emphasized the three-and-a-half-fold surge in loan defaults since 2012, attributing it to various irregularities.
The consequences of these defaults are reverberating through both public and private banks, exacerbating liquidity crises and escalating provision deficits. Dr. Fahmida pointed to a worrying trend in the overall banking system, particularly highlighting concerns in state-owned banks, particularly the specialized banks.
She criticized the central bank’s role in safeguarding public funds, citing weak policy measures influenced by beneficiaries. Dr. Fahmida expressed concerns about the increasing influence of a consolidated group in controlling the country’s banking sector. The impact of attempts to control inflation through increased bank interest rates has been negligible, leading Dr. Fahmida to propose reinforcing the Competition Commission and calling for heightened monitoring of syndicates.
During the press conference, Professor Mustafizur Rahman, a distinguished fellow of CPD, emphasized the heightened risks in the current state of the economy. He drew attention to the substantial transfer of wealth from the poor to the rich due to excessive inflation and proposed coordinated measures involving interest rates and exchange rates.
In terms of income inequality, Rahman highlighted a drastic increase in the wealth gap, urging the importance of tax collection to ensure fairness in distribution. However, he expressed concern about the lack of improvement in revenue collection, warning against a situation where the entire income is spent on revenue expenditure, making development entirely dependent on loans.
In conclusion, the CPD researchers called for a shift in focus from taking loans for new large-scale infrastructures to advancing current projects and profitably managing existing infrastructures.
