For the central bank to have found 10 state-owned banks with severe irregularities, massive defaulted loans, gross mismanagement, liquidity shortages, and a myriad of other issues is no surprise.
Banks play an important role in the maintenance of any working economy, but the flaws found within these financial institutions have been around for a long time, and are entirely symptomatic of our even more flawed overall financial system.
Non-performing loans (NPLs) in Bangladesh have surpassed more than Tk100 crore, and they are a result of corruption, mismanagement, and the continued politicization of our banking system. There is also the lack of accountability that has allowed powerful actors to get away with loans they never intended to pay back for decades at length, impacting our overall economy.
Such loans -- amounting to thousands of crores of Taka -- have continued to build up over the last few years to inordinate amounts, and financial experts have continuously emphasized the need to bring this number down as soon as possible, as it threatens our entire development journey towards middle-income status.
Change has been a long time coming, to say the least.
As part of their plans to mitigate any financial downfall from the unscrupulous activities of the 10 identified SOBs, the central bank is now considering salvaging whatever is left of these failed institutions in a new deal.
While such measures are necessary given the state of the global economy, the primary focus should be on preventive measures that punishes willful defaulters and the banks which facilitate them, which means compliance and monitoring bodies need to be armed with the appropriate powers to carry out their duties to that effect.
We cannot let our SOBs bring down our economy from reaching its fullest potential any longer.
