The banking landscape in Bangladesh continues to be steeped in controversy with news that the state-owned Janata Bank had extended an interest waiver worth TK3,359.19 crore to AnonTex, one of its five largest borrowers.
AnonTex’s liabilities to Janata stand at Tk7,726cr, which is 334% of the bank’s paid-up capital. As per regulations, state-run banks are not allowed to lend more than 25% of their paid-up capital.
As of December 2022, default loans at banks in Bangladesh increased by 16.8% to Tk120,656, resulting in Bangladesh possessing the second-highest bad loan ratio in the entire sub-continent. News of defaulted loans, loans taken through forged papers, and other unscrupulous methods grace the news almost every single day. Given the global economic downturn and the inflationary challenges weighing heavy on the national economy, incidents like this only add fuel to the fire.
Furthermore, given our economic ambitions and our quest to increase business investments -- from both local and international sources -- this recent news is a heavy blow to the potential market confidence that Bangladesh has been trying to build up for the past several years.
If left unchecked, bad loans -- in tandem with all the other factors which keep our nation’s business and financial environment from being as strong as they can be -- will not only create a problematic environment for investors but will make the lives of the general populace unlivable.
The government needs to step down on these bad loans. Bangladesh Bank needs to take a closer look at banking operations and enforce its mandate where applicable. A committee of both national and international stakeholders needs to audit these activities, and they need to be empowered to weed out corruption and inept practices.
We cannot let bad loans tear down our banking sector for any longer.
