• Saturday, Jan 18, 2020
  • Last Update : 11:00 pm

Ending the culture of bad loans

  • Published at 06:14 pm October 9th, 2017
  • Last updated at 06:40 pm October 9th, 2017
Ending the culture of bad loans

With a staggering Tk119,000 crores in accumulated default loans, it is about time that the government took a long hard look at the banking industry.

And it is time we broke this curse, which is wreaking havoc on our banking sector.

We have long editorialised on the decrepit status of our state-owned banks: These institutions continue to be mismanaged, flout essential rules, and issue loans with severe irregularities.

Bad debts are no laughing matter. With the rising number of bad debts in the sector, the entire economy is threatened.

As such, it behooves the government to reign in institutions which continue to ignore basic banking rules and issue loans which inevitably end up being defaulted.

Time and again, loans are being provided because of political association, and this practice needs to be brought to an end.

Unless we bring in accuracy, accountability, and good governance to the financial sector, this irresponsible and dangerous game of loan defaulting could potentially see the entire country brought down to its knees.

In that regard, good governance is key.

A recent study has already concluded that eight state-owned banks in the country have severely poor risk management, which not only results in loss-making institutions, but in an alarmingly increasing number of defaulted loans.

Each and every loan application needs to go through a rigorous process, by which default loans are minimised, and banks should be held accountable for flouting rules and regulations.

Finally, big defaulters must be brought to book by legal means.