Default loans, by now a well-known part of banking vernacular, have repeatedly made headlines in the banking sector over the past few years. However, despite the limelight it has been in, loan defaulting continues to be a major problem, and a possibly fatal one for developing economies.
Why did it happen to us?
Although a government might think that making a closed economy and restricting outgoing transactions will prove favourable on a large scale in the long run, this is merely an example of failed rational thought.
Not only does restricting outgoing transactions not affect those who are really at fault, most of the money which comes from defaulting loans is subsequently laundered to other countries. And so it turns out that the people affected by restricted transactions are not the same as those involved in such money-laundering schemes.
Political interferences in loan approvals, and the unprofessionalism and ineptitude of bankers who deal with loan sanctioning make it a nigh impossible task to track loan defaulters. And the less said about the needless propping up of state-owned banks (SoB), the better.
Most of our politicians have already failed to prove themselves credible in the people’s eyes, and as such have failed to earn their trust. But that hardly seems to bother them.
The extent of their disregard when it comes to even wanting to earn the citizens’ approval makes it seem as if the country or its development is of no concern to them -- what really matters is their own interests.
What they do fear, however, is being exposed to the public. And this unlikely weakness can be used against them. Creating a fully decentralized ledger will make it possible to make all loans and repayments -- or absences thereof -- transparent to the public.
Because it will be fully decentralized and immutable, no one will be able to manipulate the data once it has been input. Put simply, the public will be able to see for themselves whether or not their representatives and spokespersons are involved in heinous acts.
The top ten banks with the highest rates of loan default are: Sonali Bank, Basic Bank, Janata Bank, Agrani Bank, Bangladesh Krishi Bank, Rupali Bank, Islami Bank, Pubali Bank, United Commercial Bank, and National Bank. Among these, seven are SoBs.
These banks recruit their employees based on memorized material, which includes English, Bangla, general knowledge, and mathematics. Employing people based on these criteria rather than a set of analytical questions ultimately results in the formation of a large and unprofessional body which is unfit to run a specialized sector dealing with the country’s sensitive issues.
Loan defaulters threaten to destabilize our very economy in the long run, and the primary issue here is the needless and unhinged propping-up of SoBs, which sets a very dangerous precedent for would-be defaulters, arming them with the sort of impunity that would further perpetuate fiscally irresponsible behaviour that only harms our economy.
Shahdat Hossain Sagor is a freelance contributor.