Between 2008 and 2023, a staggering Tk92,261 crore, equivalent to 12% of the national budget for FY24, was embezzled through 24 major banking scams, the Centre for Policy Dialogue (CPD) revealed at an event on 12 August.
The event, titled “Bringing Discipline in the Banking Sector: What Should be Done Immediately,” highlighted the erosion of public trust in the banking sector due to its continuous decline and the inadequate measures taken by policymakers from the previous government.
Fahmida Khatun, executive director of the CPD, delivered the keynote address, outlining several critical recommendations for improving the sector.
The CPD emphasized the need to strengthen commercial banks, uphold the independence of Bangladesh Bank, create a conducive legal and judicial environment, and ensure the integrity and timely availability of data.
The organization pointed out that creditworthiness is often assessed based on political connections rather than financial viability. It also highlighted the low recovery rates for rescheduled loans, with only 33% of first-time rescheduled loans and 30% of third-time rescheduled loans being recovered.
The CPD called for an end to the repeated rescheduling and write-offs of non-performing loans (NPLs). It also identified several banks as “clinically dead” and recommended that they be allowed to close down.
Addressing the issue of embezzlement, the CPD urged for thorough investigations and the prosecution of all individuals involved in fraudulent activities.
The advocacy group also raised concerns about a single corporation gaining control of over seven private commercial banks, stating that this should not be permitted.
To expedite the resolution of loan default cases and reduce the backlog, the CPD recommended increasing the number of judges dealing with cases under the Financial Loan Court Act 2003 and the Bankruptcy Act 1997.
The briefing was attended by CPD Distinguished Fellow Prof. Mustafizur Rahman, Research Director Khondaker Golam Moazzem, Senior Research Fellow Towfiqul Islam Khan, among others.
