How much longer will the government keep bailing our inefficient, loss-making banks?
In yet another spectacular waste of tax-payer money, Bangladesh Bank has decided to prop up the dying Farmers Bank Ltd, raising further questions into the administrative body’s lack of vision in solving the banking crisis.
For the past couple of years, our banking sector has been struggling with defaults on loans. In fact, at the end of September last year, the amount of default loans reached a staggering Tk80,000 crore -- with most of the bad loans being made by nine banks that came into operation only after 2013.
Of course, it is a surprise to no one that the majority of these defaulting banks are state-owned organizations.
There is no reason that honest tax-payers should keep propping up corrupt and inefficient banks, which show no signs of cleaning up their act.
This only gives banks a sense of impunity and entitlement, as they go on expecting the government to bail them out of any bad situation.
Not only that -- these bailouts actually incentivize banks to prey on their customers’ savings, and the path is paved for future banks to behave in the same inefficient pattern.
Enough is enough -- banks need to shape up or go under.
The banking sector is in crisis, and instead of saving it by implementing proper regulatory measures, we have been worsening the problem.
Let us not go on rewarding irresponsible behaviour on part of banks like Farmers Bank Ltd -- failing banks should be left to fail.