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Prompt action against bank, stock market looters pledged

  • Published at 01:09 am December 18th, 2018
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Strethening BB, abolishing Financial Institutions Division

Major opposition platform Jatiya Oikya Front in its 14-point election manifesto for the 11th parliamentary election, has pledged to bring reforms to the country’s ailing banking sector, including abolishing the Financial Institutions Division to strengthen Bangladesh Bank’s authority to monitor the sector.

Nagorik Oikya Convener Mahmudur Rahman Manna announced the reforms yesterday, reading out the manifesto at a Purbani Hotel event in Dhaka.

“The country’s banking sector is on the verge of collapse due to looting and indiscipline. Stability will be brought back to the sector very quickly by taking stern action,” reads the manifesto. 

“Bangladesh Bank will be given supreme authority to monitor banks, while the Financial Institutions Division under the Ministry of Finance will be abolished.” 

The alliance also promised to take initiatives to bring down trade and budget deficits, as well as per capita debt. 

According to the manifesto, default loans will be recovered on a priority basis.

As of September 2018, the non-performing loans (NPLs) of banks stood at Tk99,370 crore, or 11.45% of total loans disbursed, amounting to Tk1,53,933 crore.

Of the total NPLs, default loans of six state-owned commercial banks stood at Tk48,080 crore of their total loans.  

Speaking to the Dhaka Tribune, Dr Zaidi Sattar, chairman of Policy Research Institute (PRI) said: “This is a good initiative if the aim is to give autonomy to the central bank and complete supervision over the banking sector.” 

Except the appointment of the Bangladesh Bank (BB) governor—which is recommended by the finance minister and approved by the prime minister—the central bank should be able to monitor all issues and ensure good governance, he added.

“Default loans have turned into toxic assets. When NPLs are this big or highly concentrated, the banks face problems, not borrowers,” said Zaidi, adding that whoever comes to   power will have to address the issue.

Zaidi further suggested converting all state-owned commercial banks into deposit banks except only one for treasury functions, and to stop state-owned banks from lending money as they hold the major share of default loans.

Speaking about the alliance’s demands, former BB deputy governor Ibrahim Khaled said: “If the Jatiya Oikya Front firmly commits to abolishing the Financial Institutions Division to bring stability and discipline to the sector, we also demand the same.”

“If we cannot bring the banking sector back on the right track, the economy and the country will suffer a lot,” added Khaled.

“In the election manifesto, political parties make good and popular pledges but they forget it after the election. I hope the Jatiya Oikya Front will keep their word,” said the economist, adding that parties that are not in power, should pressure the government to implement such steps and cooperate to attain these goals.        

The alliance also pledged to bring to justice, stock market manipulators responsible for the 2010 crash. 

“In collaboration with the government, a vested quarter took away a huge amount of money from the stock market by deceiving thousands of stock investors,” read the manifesto. 

Additionally, proper initiatives will be taken soon to bring the stock market back on the right track by protecting investor interests and providing incentives, according to the manifesto.

Industrialization and workers welfare 

Beyond the financial sector, the alliance also came up with policies for the country’s $30.60   billion export-oriented apparel sector and its workers.

The alliance promised to use diplomatic lobbying to increase the price of garment products and offering incentives to apparel investors relocating their businesses from other countries to Bangladesh. 

Moreover, the Jatiya Oikya Front promised to increase the monthly minimum wage of apparel workers to Tk12,000—currently Tk8,000 per month—within the next two years, and to establish multi-story buildings in the industrial areas to ensure adequate housing facilities for workers.

It also pledged to introduce health insurance for workers at Tk250 per month, of which workers will bear Tk100 and owners will bear Tk150.