A free rein for bank defaulters!

THE slew of financial scandals of not-too-distant a past has not faded from collective memory. Yet Bangladesh Bank has opted to relax rules regarding sanctioning of loans to bank defaulters. The move is in direct contravention with the spirit of bringing to book parties which have for long bled the banking system dry by taking loans and not paying them back. The latest restructuring policy adopted by the central bank allows large bank defaulters 12 years instead of 8 to repay loans worth
Tk 500 cr or above. That is not all; such borrowers get the facility of lower interest rates and down payments on easier terms than smaller borrowers.

Needless to say, this is discriminatory and will only encourage the loan-default culture. This paper has repeatedly written on the need to ensure transparency for better governance in the financial sector. According to experts, the present restructuring policy will do little to help the average loan seeker. Rather it will aid in promoting the idea that it is alright to default on loans and then get the benefit of repayment over a longer period of time on easier terms. Much needed reform highlighted in the aftermath of financial scandals over the last few years has not been paid heed to. That insider trading and politicisation of the boards of banks have in the past and present contributed to much of the bad loans continue to be overlooked. Unless we are willing to get tough on the culture of default loans, good financial governance will remain a distant dream.

Source: The Daily Star

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