WITH the banking sector obviously not running well, the volte-face of the finance minister Abul Maal Abdul Muhith on the institution of a banking commission, which has been in discussion for the past quarter of the year, is worrying. The minister, in his proposal for the budget for the 2019 financial year in the parliament on Thursday, conveniently remained almost silent about the ailing state of the banking sector. Yet the minister proposed the spending of an unspecified amount of the allocated fund on bailing out banks such as Sonali, Janata and BASIC, which have been mired in politically-linked loan scams for quite some time because of irregularities that have brought down the whole banking sector, in the next financial year. Now, at a briefing post the budget proposal on Friday the finance minister’s saying that there would be no commission on the banking sector is concerning. He is reported to have saved the task of the institution of the banking commission for the next elected government. Having a banking commission could help the country get out of the problems that have for some years been eating away at the banking sector.
The Bangladesh Bank data show, as New Age reported early June, that classified loan in the banking sector soared by 19.22 per cent or Tk 142.86 billion in three months and the central bank has instructed all the scheduled banks to monitor the use of loan proceeds. Banks are reported to have faced problems in liquidity management, which has forced the central bank, as New Age reported on Saturday, to sell $2.7 billion to stabilise the market. Janata Bank is mired in loan scams of Tk 12 billion and Tk 55 billion given to two business groups, Sonali Bank of Tk 35 billion, BASIC Bank of Tk 60 billion and Farmers Bank of Tk 1.6 billion. Besides the six state-owned banks — Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Bangladesh Development Bank and BASIC Bank — as media reported in March, account for the largest share of classified loans at the end of 2017, with the amount standing at Tk 293.96 billion in private commercial banks, Tk 21.54 billion in foreign commercial banks and Tk 54.26 billion in state-run specialised banks. Yet the government, despite expert opposition, has been all willing to shelve out money for the bank without attending to the problems, and holding to account people responsible for such a situation, that have largely been inherent.
An effective banking system is essential to the working of a modern economy and an independent banking commission is required to emerge from the financial crisis, a manifestation of a deep-rooted set of problems plaguing the banking sector persistently. It is time that the finance minister, and the government, realised that putting more capital into the ailing banks and then returning to the business as usual will not be enough. A situation like this calls out the government on not delaying the institution of the much-talked-about banking commission so that financial irregularities could be redressed.
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