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Dhaka Tribune

Revised loan rescheduling policy creates income inequality

Economists say at a dialogue on ‘Whither Inequality in Bangladesh

Update : 17 Oct 2019, 10:42 PM

The country's two eminent economists yesterday came down heavily on the latest loan rescheduling policy of Bangladesh Bank, saying the revised policy was creating income inequality.

They said absence of political goodwill in the policy making process was also responsible for such inequality.

Former finance advisor to a caretaker government, Dr AB Mirza Azizul Islam stated that the country's financial sector became the major source for disparity.

"Good borrowers, who payback regularly, are paying 13% interest against bank loans whereas defaulted borrowers enjoy fresh rescheduling facility at 2% down payment facility. It creates a huge income disparity," Islam said at a dialogue on "Whither Inequality in Bangladesh" at CIRDAP auditorium in the capital.    

Bangladesh Bank extended the relaxed loan rescheduling facility for the defaulted borrowers in last May.

Planning Minister MA Mannan attended the dialogue as chief guest. Unnayan Onneshan Chairperson and Dhaka University Professor Dr Rashed Al Mahmud Titumir presented a key-note paper. 

OXFAM International's Bangladesh chapter organized the dialogue with its country director Dipankar Datta in the chair.

Former governor of Bangladesh Bank (BB) Dr Salehuddin Ahmed shared his experiences during his stint at the central bank.

"There were instances that bankers and their aides were often spared from legal actions, even after stealing huge money from banks."     

"Trial process for stealing bank money is too lengthy and thieves are not punished. Bankers and their cohorts are spared from legal actions in most cases."

He maintains: "During my tenure, I have seen that lakhs of certificate cases were filed against small borrowers, who were low-tier private or public sector employees, traders or farmers. Many of them were micro, small and medium entrepreneurs. But, such legal actions were rare seen against big borrowers." 

The former BB governor said absence of political goodwill in making prudent policy for protection of depositors' money at banks was largely contributing to inequality and creating fresh poverty. 

"Problems were known, who created the problems was known, and what were the solutions were also known to policymakers. But, there was rarely any punishment taken against stealing money from banks." 

He said he had been teaching at a leading private university, Brac University, where he found the quality of education had been falling for years.

He said the existing state of higher education was no more helpful to obtain a job, resulting to a higher unemployment rate.

"Education quality fell strikingly. I myself have been teaching at Brac University since 2011. In the last six years, I found the quality of education dropped gradually."

"For instance, some 31 students of last batch of MBA (Master of Business Administration) sat for an exam the day before yesterday. Ten of them submitted their blank papers," Azizul Islam told the dialogue.

Prof MM Akash of University of Dhaka said inequality in labour wage was extremely high in the country. 

"Productivity increased 3.59% in the country over the last few years while wage increase was 0.3% only," he pointed out.

Former advisor to caretaker government Rasheda K Chowdhury, Former Secretary of the Internal Resources Division Abdul Majid, Executive Director of Centre for Policy Dialogue Dr Fahmida Khatun, Prof Sadeka Halim of University of Dhaka, Ambassador of the Netherlands to Bangladesh Harry Verweij, Badrul Alam, President of Bangladesh Krishak Federation and OXFAM officials SM Monjur Rashid and Dr Khalid Hossain spoke, among others.

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