Monday, January 22, 2018 | ePaper

Recapitalisation making banks bankrupt only

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AS the growing non-performing loans are depleting the treasuries of state-owned banks, the government has been pouring huge chunks from the National Exchequer in every budget since 2011-12 without taking comprehensive efforts to realize the loans. The ongoing mechanism seems to be where some vested quarters, mainly ruling party blessed businesspeople, take loans from banks without proper mortgages and documents and does not pay monthly installments, but no legal action is being taken against them or they are not averted from taking new loans.

As per Bangladesh Bank data, the non performing loans soared to 82 percent of the total bad loans in the banking sector at the end of March while the SoBs has 84 percent of such classified loans. In the name of recapitalization, the government has poured Tk 9,500 crore in the SoBs but the situation is deteriorating as the money is ultimately being invested in the lockless treasury from where the thieves are misappropriating the sums. Without plugging the hole in the system, the budgetary allocations can only encourage the mismanagement, corruption and bad loans.

The BB data revealed that at the end of March 2017 the default loans reached Tk 35,715 crore in the six SoBs, whereas Tk 29,920 crore is classified as bad loans. The default loans at 39 private commercial banks have soared to Tk 29,727 crore, where the bad loans are Tk 23,829 crore. The loans, if not realized in three consecutive months become default loans, after six months they are classified as doubtful loans, and after nine months they turn into bad loans. At the end of nine months tenure, the banks can take legal steps to realize the loans but the legal process consume  a long time and money, bringing  a new burden on the banks.
Over the years, the trend has  paralyzed the banking sector but no harsh steps have  yet  been chalked out but injecting money from tax-payers pocket is going on without plugging the spillages. The mechanism followed by vested quarters of new businesses is the easiest way of swindling money as the government injects money which is swindled.

The recapitalizing scheme that bears no fruit over the years is set to get another Tk 2000 crore in the upcoming budget of 2017-18. The loan defaulters, money swindlers, corrupt officials of the SoBs are lucky as government is set to award them in the name of recapitalization. So, there remains no need to repay the loans to the banks. This state mechanism has already proved suicidal and nonperforming, rather encouraging to the loan defaulters.

It is a tragedy that the government itself is not willful to realize the money that was disbursed to the defaulters but is rather injecting new capital in the SoBs by realizing the hard-earned tax money from ordinary people by squeezing them. The damage which occurred in the banking sector will not only bankrupt the banks but also the national economy. All powers should be invested to realize the money and make the banks vigorous again.

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