'The banking sector is hostage to certain people and organizations'
An enlightened political support is a must to form a transparent and effective banking commission to reconstruct and rearrange the ailing banking sector of the country, said Centre for Policy Dialogue (CPD).
It also urged the government to provide the commission with enough opportunity to work independently.
Dr Debapriya Bhattacharya, distinguished fellow of the Centre for Policy Dialogue (CPD), made the comment while addressing a press briefing, "Proposed Banking Commission: CPD's Reaction," in Dhaka on Saturday.
CPD Executive Director Fahmida Khatun and distinguished fellow, Professor Mustafizur Rahman, also spoke on the occasion.
Recently, a Bangla daily newspaper reported that the government is going to form a Banking Commission to bring discipline to the country’s banking sector, where economist Prof Wahiduddin Mahmud is likely to be appointed Commissioner.
Welcoming the government’s initiative, Debapriya Bhattacharya said: “Right now, the country’s banking sector is facing a crisis of confidence, transparency, and to some extent reliability. The commission will have to work to overcome these issues.”
Above all of these constraints, it is imperative to receive enlightened political support to attain the goals, he said, adding: “If there is no political support, the commission will remain only in name, and the opportunity to bring an effective change to the sector will not be visible.
“Bangladesh Bank cannot exercise its power given by the country’s laws, due to political interference. That's why the banking commission has to be empowered without political interference,” Debapriya added.
Reconstruction and rearrangement is very important, he mentioned. “We think it is a unique opportunity, which comes at last, and is proof of political foresight. It should not be neglected,” said the economist.
“A certain quarter of business people and organizations have taken the banking sector hostage. In such a situation, we are seeing progress in the process of forming the banking commission, which is encouraging, and we feel happy about it,” said Dr Debapriya Bhattacharya.
To form the commission, there have been political consent and blessings from the highest level, and it’s a wise decision, said the economist.
Hailing the government initiatives, the economist said: “After the Hall-Mark Group scam in 2012, we suggested forming of the commission to rein in bad loans and bring discipline to the sector.”
On Wednesday, Finance Minister AHM Mustafa Kamal said formation of a banking commission is a must to recover from the current crisis.
Earlier on February 13, the High Court asked the government and the Bangladesh Bank to explain why they may not be directed to form an independent commission.
Expectation from the commission
“We, the helpless and afraid citizens are staring at a dangerous and fragile situation with the banking sector. The fragility is not in bad loans, but deposits, savings, capital shortfall, and real profitability,” said Debapriya.
So, the first expectation from the commission is that it depict the real picture of the country’s banking sector in a transparent and comprehensive way, and it should be informative, said the economist.
Based on the data and publications, the commission has to concretely explain the impact of the banking sector on the country’ economy, said the think tank.
The CPD also suggested that the commission will have to articulate the steps already taken to tackle the present situation and its opinion on their effectiveness, as it is a must to take new measures, said the economist.
Finally, in salvaging the sinking banking sector, the commission has to recommend a fruitful, implementable, and sustainable recommendation in both the short and medium term, he added.
On top of that, the CPD has also raised questions about the working areas of the proposed commission. It queried whether the commission will work on only the banking sector or on the overall financial sector, which is interrelated, such as the stock market.
“Will the commission work on only the state owned banks or on both the private sector and foreign banks?” he said.
He also hoped the commission will work on issues which actually affect the sector.
The commission will also have to look into why the Bangladesh Bank is failing to exercise power despite being empowered by the country’s laws, he added.