Growth of the banking sector in Bangladesh have declined by 1.22 percentage points in the outgoing fiscal year 2017-2018 amid series of scams in the banking sector with growing number of non-performing loans.
According to Bangladesh Economic Review 2018, growth of the financial sector has declined to 7.90 per cent in the outgoing fiscal from 9.12 per cent in the last fiscal year.
The data also show that banking sector registered a lower 8.51 per cent growth in the FY18 from 9.95 per cent in the previous fiscal.
Besides, the growth of insurance and other sub-sectors also declined to 1.63 per cent and 9.05 per cent respectively, it shows.
Loan scams in a number of banks along with collapse of Farmers Bank pulled down the growth of the financial sector in the FY18, economists said.
Meanwhile, classified loans in the country’s banking sector stood at Tk 88,589 crore as of March this year with an increase of 19.22 per cent or Tk 14,286 crore during January-March quarter of FY18.
Moreover, bank owners were creating pressure over the Bangladesh Bank, thus distracting the entity from ensuring smooth operation of the sector.
Despite being unable to pay depositor money following loan scam, state-owned Sonali, Agrani, Janata and Rupali banks provided Tk 160 crore each and state-owned Investment Corporation of Bangladesh provided Tk 45 crore to make a fund of Tk 715 crore to bail out the almost bankrupt Farmers Bank following government instructions.
Also, banks’ cash reserve requirement was also lowered to 5.5 per cent from 6.5 per cent in the face of demand from the bank owners.
Former Bangladesh Bank governor Salehuddin Ahmed told New Age last week that the banking sector failed to recover from its disastrous position in the outgoing financial year with problems remaining unsolved, no improve
ment in governance and continued high rate of corruption and writing-off of bad loans.
Criticising the central bank, he said that it bowed down to the pressure of bank owners instead of enforcing banking rules and regulations to protect the interest of depositors.
Another data show that the agricultural sector’s contribution to economy has been on the decline for the twelfth fiscal year in FY18.
The sector’s contribution declined to 10.54 per cent in FY18 for 11.12 per cent in FY17 despite the fact that the sector attained a higher growth of 2.01 per cent in the outgoing fiscal against 1.96 per cent in the previous fiscal.
Apart from that, industry and fisheries sectors attained a higher growth during the fiscal year, among others, while electricity and education sectors’ recorded lower growth in FY18.
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