No one for the depositors

No one for the depositors

Khondokar Ibrahim Khaled | Prothom Alo  Jun 11, 2019

Khondokar Ibrahim KhaledDefault loans are the main problem of the country’s banking sector. If the default loans decrease, interest rates will automatically decrease. But the government, instead of paying attention to this, is calling for interest rates to be fixed at 9 per cent. And rather than taking any measures against the loan defaulters, they are facilitating them further. The government’s policy does not make sense.

The nexus between the loan defaulters and the bank owners has led to the problems and unrest in the banking sector. It is difficult for professional bankers to work in such circumstances.

There is no one to look after the interest of the depositors. This is the responsibility of Bangladesh Bank but this institution too is unable to perform its duties. The government should give the central bank full authority. This will give the depositors confidence and clear up a lot of crises.

If the central bank is weakened, there is no guarantee that the public will get back the savings they deposit in any bank. Nowhere in the world is the central bank’s authority curbed. In India, the Modi government took initiative to channel some funds from the Reserve Bank of India to a different sector, but the bank’s governor resigned in protest. The government then was obliged to move away from its decision.

In the meantime here, the loan defaulters are extracting one favour after the other from the government and so do not care about the bankers. The banks have many tools to determine good and bad borrowers. There is no way a loan defaulter who defaults thrice on his loan, can be called a good borrower. The facilities they are being provided are an injustice to the good borrowers, it is repression.

The bank crisis has led to a lack of confidence and so deposits are falling. Foreign currency is being spent on mega projects like Padma Bridge and Rooppur nuclear power plant and so the banks are having to pay taka for dollars. The government has to fix its target in the budget and bring about a balance between the foreign exchange reserves and the big project expenditures. If not, the crisis in the foreign currency market will not be resolved. The local currency crisis will also linger.

*This piece, originally published in Prothom Alo print edition, has been rewritten in English by Ayesha Kabir. 

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