• Saturday, Nov 23, 2019
  • Last Update : 02:41 am

The culture of bad loans must end

  • Published at 12:05 am June 12th, 2019
Piggy Bank
Photo: BIGSTOCK

When it comes to non-performing loans, state-owned commercial banks stood out as the chief culprit

To say that our banking sector has been suffering from a serious crisis would be a gross understatement.

While the total amount of bad loans stood at about Tk90,000 crore in the month of February this year, they have risen by close to Tk17,000 crore in the subsequent months -- an astonishing amount.

It is unfortunate that amidst all the positive upward trends Bangladesh has experienced over the past decade, there has also been an unfortunate upward trend in non-performing loans and defaulters -- a trend that threatens to undo all the good that has happened to the country’s economy.

This cannot be allowed to happen.

It is also clear that when it comes to non-performing loans, state-owned commercial banks stood out as the chief culprit, accounting for about half of the total non-performing loans. In fact, of all of their disbursed loans, over 32% of them were default loans.

Several experts have argued that the recent policy changes adopted by the central bank and other relevant authorities seem to have provided respite to the defaulters while subsequently discouraging good borrowers, and the focus is now firmly on the central bank to rectify these mistakes.

It goes without saying that a robust banking sector is one of the cornerstones of a healthy, functioning economy. However, for too long, ours has been mired by rampant corruption, nepotism, favouritism, political interference, inefficient policy changes, and an overall culture of impunity. 

It is high time that we treat this culture of bad loans with utmost priority or continue to suffer the consequences.