Centre for Policy Dialogue holds a press briefing on the proposed banking commission at BRAC Centre Inn in Dhaka on Saturday. — New Age photo
The country’s banking sector is heading for a fragile state as it is held hostage by a few individuals and entities, said Centre for Policy Dialogue’s distinguished fellow Debapriya Bhattacharya on Saturday.
He also said that the Bangladesh Bank could not function properly.
He was speaking at a press briefing arranged by the local think-tank in the capital to provide its opinions about the government move for appointing a banking commission.
Debapriya did not name the individuals and the entities but highlighted the huge amount of the non-performing loans and the liquidity crisis to describe the situation of the banking sector.
The defaulted loan shot up to Tk 1.16 lakh crore as of September 2019, marking a rise by Tk 93,807 crore in last 12 years.
Debapriya, however, welcomed the government move to set up a commission, a long-standing demand by the country’s economists and CPD itself since the swindling of Tk 3,547 crore by little-known Hallmark Group from Sonali Bank, the biggest state-owned bank, surfaced in 2012.
Referring to the statement by finance minister AHM Mustafa Kamal on Wednesday that appointing a commission on the banking sector was a ‘must’, Debapriya said that they were ‘highly encouraged by the announcement’.
Mustafa Kamal had also stated that they were looking for a competent person for the commission’s chairman while responding to a question if his meeting with noted economist Wahiduddin Mahmud was a part of the proposed commission.
Answering a question, Debapriya said that there was no doubt about the credibility and the capacity of Wahiduddin Mahmud to head the commission.
But, he said, they would wait until the official announcement in this regard to greet him as the chairman of the proposed commission.
Whether the move to appoint a commission is just a formality against the February 13, 2019 High Court ruling why the government and the central bank would not be directed to form an independent commission against a writ petition filed by Human Rights and Peace for Bangladesh, Debupriya said that they wanted a credible commission to be run in a most transparent manner.
CPD executive director Fahtima Khatun earlier at the event said that they put forward at least half a dozen recommendations to be included in the terms of reference for the proposed commission.
The recommendations included evaluating the banking sector, diagnosing its problems, short and medium-term measures and a roadmap to rescue the sector, she said.
She also said that they expected the short-term measures before the announcement of the next budget so that the finance minister could incorporate them in the annual fiscal measures.
Among others, another CPD distinguished fellow Mustafizur Rahman attended the briefing and suggested that the proposed commission should have the scope for dealing with the capital flight.
Bangladesh’s exposure to illicit financial outflows is very high among the least developed countries as the rate of such outflows was equivalent to 36 per cent of the country’s tax revenue and 3 per cent of the gross domestic product in 2015, according to a report of the UN Conference on Trade and Development released in November, 2019.
Mustafizur said that the government should take an initiative to bring back smuggled money the way neighbouring India had taken a similar move with the help of the World Bank programme called ‘Stolen Asset Recovery Initiative’.
The CPD officials further said that the proposed commission should also be given the scope for identifying as to why the central bank could not enforce its regulations.
The proposed commission should analyse activities of the individual banks and also the loan scams, now being addressed by the Anti-Corruption Commission, for greater credibility of the commission as well as for a meaningful reform, they offered.
They mentioned that CPD officials had been included in previous banking sector-related reform programmes.
But many recommendations by the committees were not implemented, they said, adding that ‘political will’ was a must for positive changes in the banking sector.
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