From the Editor-in-Chief: The crisis in the banking sector

Enayetullah Khan
Thursday, December 28th, 2017
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The banking sector of Bangladesh is becoming a mess nowadays. Recently the Farmers Bank, which has passed only four years of operation after launching in 2013, began to dominate the newspaper headlines for coarse violation of banking rules in approving and distributing loans. The finance minister blamed the directors for this scandal. But he didn’t agree on closing down the bank. The bank is now facing an acute liquidity crisis because of unbridled expenditure of loans. It raised defaulted loans to Tk 377.68 crore by last September. In November, the central bank presented a report to the parliamentary standing committee on the finance ministry. In the report, the central bank claimed that Farmers Bank had been ‘risky’ for the financial sector because of vices and indiscretions.

 

A ruling party lawmaker was the chairperson of this bank. It has also been reported that a former member of the student wing of the ruling party is one of the 39 owners. It should be noted that the Farmers Bank, with some other banks, was approved license to function based only on partisan interests. Before the launching of the bank, opinion came from the experts opposing the establishment of this bank as in the present condition of the market a new bank was unlikely to operate properly. The finance minister realizes that the directors were responsible for the scandal. Hence, it is his responsibility to bring those liable under the law. There can be no excuse behind letting the responsible persons go unpunished. The reasons for the collapse of the Farmers Bank must be found. At the same time, proper investigation is essential to detect the real offenders. Moreover, the government must be more than ever careful before permitting any new bank to be launched. The total amount of defaulted loans in each bank should be reported so that the government can take proper action before another scandal takes place.

 

Banks are for the financial benefit of citizens. They should contribute to the economic progress of a country. In Bangladesh, it is usually observed that rich people can easily sanction loans from a bank, often in a corrupt way, while a poor man can’t even fulfill basic criteria for sanctioning loans. But the worst part is, the amount of defaulted loans is unimaginable. So the ancient rule dominates the banking sector too—the powerful dominate the world. The amount of defaulted loans can easily help tackling the poverty, unemployment and financial depression. The government is the one to take proper action about this.

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