Benefits to defaulters cause cost of capital hike for good borrowers

Says Rehman Sobhan

Staff Correspondent | Published: 00:00, Apr 30,2019


Economist Rehman Sobhan speaks at a discussion session arranged by Bangladesh Institute of Development Studies on the second day of its two-day BIDS Critical Conversations-2019 at the Six Seasons Hotel in Dhaka on Monday. Gonoshasthaya Kendra founder Zafrullah Chowdhury and Ain o Salish Kendra founder member Hameeda Hossain were present, among others. — New Age photo

Economist Rehman Sobhan on Monday said that the cost of capital for small and good borrowers became higher due to relaxed loan scheduling facility for willful defaulters.
Cost of capital should be equal for all entrepreneurs but willful loan defaulters enjoy lower rate of interest on bank loans because of rescheduling facility, he said at a discussion session on democratisation of the economy: visions, policies and challenges.
Bangladesh Institute of Development Studies arranged the session at the second day of its two-day BIDS critical conversations 2019 titled ‘Bangladesh Journey: Moving beyond LDC’ at Six Seasons Hotel in Dhaka.
Sobhan presided over the session where Gonoshasthaya Kendra founder Zafrullah Chowdhury, Ain o Salish Kendra founder member Hameeda Hossain, BRAC Institute of Governance and Development senior research fellow Mirza M Hassan and BIDS research director Kazi Ali Toufique, among others, spoke.
Sobhan, also chairman of Centre for Policy Dialogue, said that the democratisaiton could not be ensured in the country’s banking sector due to additional benefits given to loan defaulters.
He said that large-scale borrowers, also elite people in the society, became loan defaulters in large number though small-scale borrowers repaid loans regularly.
It creates disparity in cost of capital in society, he added.
Scope of democratisation in economy becomes limited in the country due to weakness in management and unequal distribution of assets, he observed.
At another session on industrialisation through special economic zones, experts said that the government should develop human resources and allocate plots for small and medium enterprises at EZs for getting desired outcomes from developing EZs across the country.
BRAC Institute of Governance and Development professional fellow Sultan Hafeez Rahman, BIDS senior research fellow Mohammad Yunus, East West University’s professor at Department of Economics AK Enamul Haque, Bangladesh Investment Development Authority executive member Moinul Islam and Centre for Policy Dialgue research director Khondaker Golam Moazzem, among others, spoke at the session.

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