No economy can progress without a robust financial sector
T\here is no doubt that the banking sector in Bangladesh is going through a crisis, with staggeringly high loan default rates that seem to just keep on rising.
The High Court’s order to halt the Bangladesh Bank circular that granted a waiver to defaulters is a laudable move, which reinforces the faith that there are checks and balances in place within the country’s framework.
The circular, which allowed defaulters to regularize their bad loans by paying a 2% down payment only, drew sharp criticism from experts and rightly so, who commented that not only would it show the entire banking sector in a bad light, but also increase the number of willful defaulters and discourage future borrowers from repaying loans.
As of March this year, of the total amount of defaulting loans, more than half were owned by state-owned banks, indicating the widespread nature of the problem within the sector mired by corruption, nepotism, favouritism, political interference, and an overall culture of impunity.
In showing a preference towards the defaulters -- who continue to cripple our economy and threaten to halt its development trajectory -- the focus is once again on the negligence of banks; our central bank surely, is also culpable for failing to address the issue over the years.
While the High Court’s order is a good first step, more needs to be done. The High Court ordering Bangladesh Bank to submit a list of borrowers with over Tk1 crore in loan defaults is also good news, and the bank must comply.
No economy can progress without a robust financial sector, and for too long, ours has been nearly crippled by a culture of bad loans -- it is about time we fixed it.