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Bringing discipline to the banking sector

  • Published at 11:00 pm January 29th, 2020
Can a banking commission remedy banking sector problems?
Photo: Dhaka Tribune

Banks must be held accountable

Despite the many success stories that have occurred across sectors in Bangladesh over the past 10 years or so, it is unfortunate that our banking sector continues to be the bad apple in the mix.

It goes without saying that a gross culture of negligence -- along with a culture of favouritism and impunity for a select few powerful parties -- has brought our banking sector to the brink of collapse.

Therefore, news that 10 banks -- including both private and state-run -- have not followed the directives of the central bank is worrisome, and adds to the woes of an already crippled sector.

These banks have lent aggressively beyond their deposit amounts, thus overshooting the advance to deposit ratio (ADR) that is to be maintained by all banks, which was 85% for conventional banks and 90% for Shariah-based banks.

Suffice to say, this negligence displayed in not following rules must be stopped. Banks must be held accountable for not following the directives set for them.

What is the point of having policies in place in the first place if banks simply get away with not following them, thereby threatening the overall health of the banking sector through their recklessness?

Moving forward, the authorities concerned must come down hard on these institutions; if we want our banking sector to have any chance of recovering from the dismal state it is in, then it is of the utmost priority to bring some discipline into it. 

Otherwise, the downfall of our banking sector could prove to be a slippery slope for the rest of our economy.