TIB findings on defaulted loans ominous
A recent TIB (Transparency International, Bangladesh) report has revealed alarming facts on the country's banking sector. The report titled, "Banking Sector Supervision and Control of Bad Debt: Challenges of Bangladesh Bank for Good Governance and Ways to Overcome It" stated that actual defaulted loans in the country's banking sector is over Tk 3 trillion, much higher than the widely specified amount by agencies concerned. The financial menace grew by an average of Tk 93.80 billion every year and its annual growth was estimated at a staggering 417 per cent, and during this period total debt in the banking sector grew by 312 per cent.
However, what comes as a shock in the list of findings of the TIB report is that , the country's central bank , Bangladesh Bank has been markedly inefficient to recover defaulted loans , and why not?
Government's policy makers and Bangladesh Bank repeatedly provided rescheduling facilities and also restructured loans. The schemes were not properly implemented, adding up more to the total debt. Moreover, legal restrictions, unending political interference, and pressure by business lobbies have made it ineffective to succeed in recovering defaulted loans.
In the long list of predicaments these are not all, poor governance including lack of oversight capacity, lack of leadership ability, transparency and accountability have driven all drives to utter failure. Much has been penned and advised on recovering of defaulted loans while completely overhauling the banking sector. Since the regulatory authority itself has failed to take action, we have enough reasons fearing a collapse any time sooner or later.
Riddled with mounting non-performing loans and rampant corruption, we now draw urgent attention of our political leadership. The point here, the country's economy is not immune from internal and external factors. Any major external shock such as the ongoing pandemic and the resulting bleak global economic outlook could send the sector spiralling into a liquidity crisis.
Desperate times call for desperate measures, but that sheer feeling of desperation is still missing. Taking the TIB report into urgent consideration, our policy makers and BB authorities must move quickly, so to deter an impending financial disaster.