A recent report by the Centre for Policy Dialogue (CPD) reveals a staggering loss of around Tk 922.3 billion by the countrys banking sector over the past 14 years, mainly attributed to 24 major scams since the fiscal year 2008-09.
At a press briefing on Saturday, CPD Executive Director Fahmida Khatun disclosed the alarming figures, emphasizing that the actual loss could surpass this amount when considering smaller irregularities such as loan write-offs, rescheduling, and court stays.
The findings are part of CPDs assessment report titled "State of the Bangladesh Economy in FY2023-24 (First Reading)," a crucial component of the think tanks Independent Review of Bangladeshs Development (IRBD) programme.
Fahmida highlighted a concerning surge in loan defaults, reaching nearly three and a half times of 2012 figures, with repercussions both on public and private banks. This has exacerbated liquidity crises and led to escalating provision deficits within the banking system.
Special attention was drawn to state-owned banks, particularly specialized banks, indicating a worrisome trend in the overall banking landscape.
Fahmida emphasized the impact on the governments fiscal deficit, significantly affecting social security, education, and healthcare sectors.
In critique of the central banks role in safeguarding public funds, Fahmisa pointed out weak policy measures and alleged beneficiary influence on policy-making. She expressed concern over the heightened stress faced by bank Managing Directors due to default loans and board interference.
"The once-stable private banks are now facing a different situation, raising worries about a single-class control in banking," she said, noting that the countrys banking sector is being controlled through a consolidated group.
Despite efforts to control inflation through increased bank interest rates, the impact on consumer prices remains negligible due to delays in implementation, FAhmida said. She proposed reinforcing the Competition Commission to curb price inflation and called for heightened monitoring of syndicates.
Additionally, she urged for increased wage rates and expanded cash and commodity assistance to alleviate inflationary pressures.
In the same event, Professor Mustafizur Rahman, a distinguished fellow of CPD, emphasized the increasing risk in the countrys economy compared to recent past years. He highlighted the wealth transfer from the poor to the rich due to excessive inflation, calling for coordinated efforts in managing interest rates, exchange rates, and other factors.
During the discussion, Rahman underscored the importance of tax collection for fair wealth distribution, expressing concern about the lack of improvement in this area. He warned against relying entirely on loans for development, suggesting a focus on advancing current projects and profitably managing existing infrastructures.
Dr. Khondaker Golam Moazzem, Senior Research Fellow Towfiqul Islam Khan, and other researchers contributed to the comprehensive report presentation in the press conference. The revelations underscore the urgent need for strategic reforms to restore stability and trust in Bangladeshs banking sector, they said.
