The corruption-ridden banking sector was the country’s biggest economic risk, said Metropolitan Chamber of Commerce and Industry in its January-March quarterly review released on Monday.
The chamber in its report also requested Bangladesh Bank to ensure strict vigilance to bring discipline to the banking sector.
As a result of corruption and scams, the amount of non-performing loans in the countrys banking sector grew to Tk 93,911.4 crore in 2018 from Tk 22,482 crore in 2009.
The rising NPL has already been identified as the major problem of the country’s banking sector by finance minister AHM Mustafa Kamal on a number of occasions since his assuming the office in January this year.
According to a report of Centre for Policy Dialogue that was released in December last year, a total of Tk 22,502 crore was plundered from the country’s banking sector through major scams, irregularities and heists in the last one decade.
The amount of money is equivalent to 39 per cent of income tax collection in the fiscal year of 2017-2018 or 78.2 per cent of the cost for Padma Multipurpose Bridge construction, said the report titled ‘Banking sector in Bangladesh: moving from diagnosis to action’.
World Bank under its financial sector assessment programme also mentioned shortcomings in corporate governance, weak credit and legal infrastructure, intense competition in an overbanked market and widespread regulatory forbearance and weak enforcement as major reasons for the weak asset quality and defaulted loans in the banking sector.
The metropolitan chamber in its review also said that the domestic credit grew by 13.74 per cent at the end of February 2019, while a higher rate of growth of 14.22 per cent was recorded at the end of February 2018.
The credit growth in February 2019 was also lower than the credit growth target of 15.90 per cent set in the monetary policy for the second half (January-June) of the current fiscal year (2018-19).
Among the components of domestic credit, private sector credit registered a much lower growth of 12.54 per cent in the period between February 2018 and February 2019 compared with 18.49 per cent growth in the corresponding period a year ago. MCCI in its report also mentioned some other downside risks for the country’s economic growth.
It identified power and gas shortage, insufficiency of investment and weak infrastructure as the major obstacles to growth as the issues could disrupt industrial production and also discourage new investment.
The chamber also mentioned poor implementation of public investment programmes, growing requirement of subsidy payments by the state to different sectors, uncertain availability of foreign loans and grants and growing income inequalities as other downside risks for the country’s economic progression.
Speaking about the economic strength, the country’s oldest chamber in its quarterly report specified that the gross domestic product growth would be significant if 8 per cent growth could be achieved.
Bangladesh’s progress in the agriculture sector and food security, moderately good growth in industry despite shortage in the power sector, decline in inflation rate to single digit, macroeconomic stability, build-up of a comfortable foreign exchange reserve, achieving most of millennium development goals’ targets, and good progress in achieving sustainable development goals have helped the country achieve GDP growth, said MCCI.
Based on an assumption that the country’s peaceful political situation would prevail in the coming days, MCCI forecasted that the country’s export, import and foreign exchange reserve were expected to increase.
According to the MCCI report, the rate of inflation might rise in April and May because of Ramadan, the fasting month for the Muslims, as some essential commodities including fuels were likely to go up in the months.
Remittance inflow may fall in June, the aftermath of Ramadan, the report said.
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