• Wednesday, May 22, 2019
  • Last Update : 11:21 am

Rein in defaulting SoBs

  • Published at 12:01 am March 13th, 2019
This is not a new issue for our banking sector
This is not a new issue for our banking sector / BIGSTOCK

This is not a new issue for our banking sector

Our banking sector is crumbling under the weight of non-performing loans and the culture of impunity that leads to them.

A recent report that revealed 52% of all non-performing loans are attributed to six state-owned banks, as of December 2018, is yet another damning indictment of the sinkhole that our SoBs have become -- with unjustified bail-outs being handed out to them by the administration despite their ludicrous track record.

The blame lies squarely on the impunity enjoyed by loan defaulters, political interference which leads to such bad loans being approved, and the lack of experience among bankers in dealing with such issues with a stricter hand.

This is not a new issue for our banking sector.

It is deeply regrettable that these SoBs are still being propped up by the administration despite all the red flags -- wasting ridiculous amounts of our taxpayers’ hard-earned money in the process.

To that end, the government’s recent plans to form a committee that seeks to bring some control and stability into our ailing banking sector is timely.

While it is an appreciable move, it is still not a substitute for punitive actions being taken against these SoBs and the corruption they breed. In letting total default loans worth Tk93,911.40 crore by these six SoBs go unpunished, the government is setting a bad precedent for the entire sector at large.

The banking sector needs a sweeping reform, with the government swiftly introducing necessary policies which would rein in these defaulting SoBs and introduce some much-needed stability into the sector.

Otherwise, our entire economy stands to be affected.