If we fail to fix our banking sector yet again, our economy could be in a serious mess
It is nothing if not worrying that almost 12% of all loans disbursed are non-performing ones, totalling a staggering Tk116,288.31 crore.
Less than a year ago, the total amount of non-performing loans stood at 10% of all disbursed loans.
Even more disturbing is the fact that this trend of non-performing loans (NPL) has continued despite regulations set in place by the central bank, with the amount of NPLs rising by a whopping Tk3,863cr in a mere three months.
Clearly, the Bangladesh Bank authorities have a lot left to do.
BB’s most recent changes to its rescheduling policy have done little to curb NPLs, and have gone completely in the wrong direction, while the culture of impunity that has existed within the banking sector continues to flourish, despite continuous warnings from experts to shape up.
As experts have repeatedly said, the central bank must be far more rigorous in watching for default loans, and not let corruption and political interference allow bad borrowers from having their way with the banking sector.
Such a culture is disastrous not only for the banking sector, but for the entire economy as a whole, with borrowers at present feeling no particular urge to play by the rules, seeing the practice of defaulting as business as usual.
Banks have a responsibility to ensure that they employ more scrutiny when looking at the eligibility of companies when it comes to loan disbursement, something that is hardly ever practised in reality.
This culture must change, and the right discipline must be brought to the banking industry immediately. If we fail to fix our banking sector yet again, our economy could be in a serious mess.