Monday, September 24, 2018 | ePaper

Finance Minister must answer, he cannot remain mum over bank scams

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ON Sunday, some ruling party and opposition lawmakers blasted the Finance Minister AMA Muhith in Parliament for his ineptness and deadly silence on the widespread irregularities in the banking sector during his budget speech. A growing number of loan scams and mismanagement have plagued the banking sector in the past few years, but the Finance Minister's inaction and silence forced the ordinary citizens to lose confidence in the banking sector. Muhith however assured the formation of a banking commission to investigate irregularities.
Presently, defaulted loans are rising and have reached nearly 11 percent of the total outstanding loans. If the rescheduling is taken into account, it would be about 20 percent. Surprisingly, many borrowers are willful defaulters. Big borrowers -- of Tk 500 crore and above -- were given extra benefits in the name of restructuring their loans in 2015. Many of them have already become defaulters and are now lobbying hard to reschedule their loans again. BASIC, once a healthy state bank, was destroyed in the hands of Sheikh Abdul Hye Bachchu during 2009-2013. The State-run Sonali, Janata, Agrani, and Rupali Banks have also been hit by big loan scams and are now being recapitalized with taxpayers' money. Now this disease has spread to private banks, such as Farmers Bank, which  is failing even to pay off depositors' money.
Newspaper reports said lawmakers slammed Muhith for favouring bank looters instead of going tough on them. The Finance Minister in the latest line of mercies slashed corporate tax for banks and financial institutions by 2.5 percentage points in the proposed budget, a move that would benefit the banks' directors. Whereas the banking sector is now struggling to survive due to the rising defaulted loans, capital shortfall and financial scams that mainly emerged from a lack of corporate governance, corruption in loan disbursements and growing influence of directors of private banks in the banks' affairs. When the AL took office in 2009, the size of the defaulted loans was Tk 22,482 crore. By March this year, it soared to Tk 88,589 crore.
The discussion in Parliament is necessary and long overdue. We must say the Finance Minister cannot remain mum on the shrinking of the banking sector. He must answer how and why thousands of crores of takas have been looted.

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