A broken sector

A broken sector

  • Dhaka Tribune December 3rd, 2019
To make a bad loan worse


A healthy financial sector is instrumental for the sustainable growth of any economy

There is little doubt that when it comes to the financial sector, Bangladesh has not fared well.

In the past, this newspaper has editorialized numerous times on the dismal conditions of our State-Owned Banks (SOBs) and the astronomical sums of bad loans that have been a thorn in the side of the economy for some time now.

To that end, it is unfortunate that, in addition to the SOBs, our non-bank financial institutions (NBFI) have not fared much better either — the current fiscal has seen a significant increase in NBFI default loans compared to numbers just half a year ago.

However, it is worrisome that, rather than address this issue within our NBFIs in its nascent stage, the authorities — and particularly the central bank — is turning a blind eye towards it by issuing new licenses to NBFIs.

This is nothing new for the central bank, one that has repeatedly looked to favour defaulters through various policy changes, and therefore discourage responsible borrowers of the future.

Ultimately, it is our culture of impunity, of a few powerful people being allowed to get away with their misdeeds, that continues to be the major problem within our financial sector.

A functioning and healthy financial sector is instrumental for the sustainable growth of any economy, particularly a growing one with lofty ambitions.

With the banking sector’s overall default loan amount increasing with each passing month, in the long run, this could be disastrous for our country and threaten to halt the impressive progress of our growing economy.


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