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Dhaka Tribune

CPD: Over 92,000C embezzled in 24 banking scams in 15 years

In Bangladesh, the average price of sugar is Tk143 per kg, while it is Tk38 in the EU, Tk108 in the US, and Tk63 globally, market research shows

Update : 24 Dec 2023, 12:28 AM

More than Tk92,000 crore have been embezzled from the banking sector through 24 major loan scams in the last 15 years, from 2008 till date, according to the Centre for Policy Dialogue (CPD).

The facts emerged on Saturday in the first CPD review of “State of Bangladesh Economy for FY24.”

The think-tank came up with the figure through a compilation of reports published in the media between 2008 and 2023.

The CPD also spoke about the high commodity prices, where it showed increased prices of essential food items from January 2019 to December 2023 in the domestic market and also in the international market.

The think-tank also pointed out that the banking sector was now in the grip of crony capitalism, which has been deepening the industry’s ongoing problems.

Raising concerns about the health of the banking sector amid rising defaulted loans and undue influence, CPD executive director Fahmida Khatun said: “The banking sector is being held hostage by crony capitalism. Banks have been used as vehicles by crony capitalists to achieve their goal of financial oligarchy.”

During her keynote presentation, she also said: “Its weaknesses have been consistently exposed through high loan default rates and sub-par performance across various indicators. This inherent fragility presents significant risks to the overall economy.”

Regrettably, the government's commitments on safeguarding the banking sector remain unmet, she commented.

Hopes of banking sector rebound fading fast

The CPD in its compilation outlines 24 major irregularities in the banking sector between 2008 and 2023, amounting to over Tk922.61 billion or more than Tk92,261 crore.

The report also noted that Bangladesh's banking sector has consistently demonstrated vulnerability, primarily because of a lack of good governance and a dearth of reforms.

Considering recurrent instances of fraudulent activities and irregularities, the actions implemented by the government have been insufficient. Non-performing loans (NPLs) remain unchecked, threatening the health of the country's financial system. 

Crony capitalists have used banks as vehicles for reaching their goal of financial oligarchy. 

The report also said, that without reducing NPLs, capital adequacy cannot be improved since higher levels of NPLs lead to increased provisioning requirements, which results in capital shortfall.

The total volume of NPL has increased by more than three times in the last ten years, from Tk42725 crore in Q4FY12 to Tk15604 crore in Q4FY23. 

However, actual NPL will be much higher if loans in special mention accounts, loans with court injunctions, and rescheduled loans are included.

As of Q4FY23, required loan loss provisioning was Tk101030 crore whereas the actual loan loss provisioning maintained was only Tk79570 crore. 

In Q4FY23, there was a Tk21460 crore shortfall in loan loss provisioning in the banking sector, including Tk10620 crore shortfall in SCBs and Tk11270 crore shortfall in PCBs.

Excess liquidity in the banking sector has declined from Tk169,556 crore in Oct 2022 to Tk158,432 crore in Oct 2023. 

Excess liquidity as a share of the total liquid assets of the banking sector declined from 41% in Oct 2022 to 38% in Oct 2023.

High prices

Regarding high prices of commodities and causes of suffering for people, the CPD said, high inflation rates hovering around the 10% mark have significantly increased the cost of living and decreased consumer purchasing power. 

Nevertheless, an analysis of the prices of several items shows that the new CPI base tends to hide the actual extent of inflation prevailing in the market.

The average price of Miniket rice increased by 12% from Tk58 per kg to Tk65 per kg, the average price of Paijam rice increased by 9% from Tk48 per kg to Tk53 per kg, and the average price of Coarse rice increased by 23% from Tk40 per kg to Tk49 per kg, between January 1, 2019, and December 20, 2023.

The average price of Moshuri dal (big) increased by 95% from Tk55 to Tk108, the average price of Moshuri dal (medium) increased by 96% from Tk63 to Tk123, and the average price of Moshuri dal (small) increased by 56% from Tk85 to Tk133 during the same period. 

The average price of loose unprocessed flour (Aata) increased by 67% from Tk29 per kg to Tk48 per kg, and the average price of packaged unprocessed flour increased by 76% from Tk34 per kg to Tk60per kg, from January 2019 to December 2023.

The average price of loose processed flour (Maida) increased by 81% from Tk36 per kg to Tk65 per kg, and the average price of packaged processed flour (Maida) increased by 51% from Tk47 per kg to Tk70 per kg.

The average price of loose soyabean oil increased by 94% from Tk81 per litre to Tk158 per litre, and the average price of bottled soyabean oil increased by 65% from Tk104 per litre to Tk172 per litre. 

On the other hand, the average price of loose palm oil increased by 102% from Tk63 per litre to Tk128per litre, and the average price of palm oil super increased by 102% from Tk68 per litre to Tk138 per litre. 

As of October 2023, the price of soyabean oil in the world market was Tk125 per litre, which was lower than the prevailing price in the Bangladesh market at the same time.

The average price of beef increased by 34% from Tk485 per kg to Tk650 per kg, and the average price of mutton increased by 27% from Tk750 per kg to Tk950 per kg. 

As of October 2023, the price of beef in the world market was Tk550 per kg, which was lower than the prevailing price in the Bangladesh market at the same time.

The average price of sugar increased by 177% from Tk52 per kg to Tk143 per kg from January 2019 to December 2023.

As of October 2023, the price of sugar in the EU market was Tk38 per kg, the price of sugar in the US market was Tk108 per kg, and the price of sugar in the world market was Tk63 per kg, all of which were lower than the prevailing price in the Bangladesh market.

During the same period, the average price of local onions increased by 282% from Tk28 per kg to Tk105 per kg, and the average price of imported onions increased by 333% from Tk30 per kg to Tk130 per kg.

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