The country’s business leaders as well as economists have showed resentment against forced merger between weak and strong banks.
They have expressed dismay at a pre-budget discussion for FY2024-25 as the Bangladesh Bank will merge weak banks in future if these banks fail to improve their financial health and decrease non-performing loans (NPLs) as part of reforming the banking sector.
Dhaka Chamber of Commerce & Industry (DCCI) organised the pre-budget discussion in association with Samakal and Channel 24 at InterContinental Dhaka on Sunday.
Financial Institutions Division (FID) Secretary Sheikh Mohammad Salim Ullah said that merger will not be done suddenly rather it will take time to process rightly.
“Banks’ merger will not proceed suddenly. It will take time and merger will be done in a proper process. So, there is nothing to get worried," he added.
Aftab ul Islam, former president of American Chamber of Commerce in Bangladesh said, "People are confused and afraid about bank mergers, especially when it comes to the potential issues that may result from merger with a weaker bank.”
Echoing the same, Bangladesh Economic Association General Secretary Dr Aminul Islam said that people are in panic and anxiety due to banks' merger.
DCCI President Ashraf Ahmed who moderated and chaired the discussion said that for a sustainable financial sector, it is crucial in carrying out few policy reforms, reducing NPLs, increasing reserves, boosting private sector credit flow and ensuring stable liquidity situation.
Business leaders have also urged the government to make an exit policy for non-wilful defaulters as such businessmen contribute to the national exchequer by paying corporate tax, VAT and duties but face identical challenges and harassment like wilful defaulters.
Former FBCCI President AK Azad called for disclosing the names of wilful defaulters who borrow money from banks but do not invest in industries, rather send them abroad.
“If the names of defaulters are disclosed, they will come under social pressure and will be forced to pay the money,” he said and shared that the private sector has to face various challenges when bank interest rates go high.
Mohammed Hatem, executive president of BKMEA said, “Such defaulters pay taxes and VAT. But when they face troubles, the government does not provide support to them. The government should make an exit policy for them.”
“Despite zero VAT for bonded exporters, they are bound to submit return every month. The government should rid them of such provisions and harassment,” he added.
Former DCCI President Sameer Sattar said, “The government should think about offshore oil and gas exploration to ensure energy supply to continue production. Otherwise, we cannot maintain competitiveness in the global market.”
Imran Karim, vice chairman of Confidence Group said, “Total tax of fossil fuel imports should be the same. In that case, if the government imports fuel at lower cost, import revenue of the National Board of Revenue (NBR) will not be hampered and people will get fuel and electricity at lower cost.”
“The government should also raise duty on electricity imports so that the price of local electricity and imported electricity will be the same and it will be competitiveness of local industries,” he said.
Containing inflation only headache now
Containing inflation is a big and only headache for the Bangladesh Bank and it is the first priority of the central bank to tame inflation, said Deputy Governor of Bangladesh Bank Md Habibur Rahman.
“We are trying to bring down inflation. We take contractionary monetary policy to create money costlier and lifted interest cap after so many days of taking such decision by other nations so that it does not hurt our business community,” he added.
“We now want to rein in inflation and there is no alternative but to raise the interest rate,” he said.
Attending the meeting as the chief guest, Finance Minister Abul Hassan Mahmood Ali said, “The government has taken various policy measures, including market monitoring. So, inflation will soon come down.”
The finance minister further stressed that the upcoming budget will be encouraging for the private sector and informed that the government will consider all the rational recommendations from the private sector.
He also said that the government is firmly committed to facilitating the private sector so that they can do their business hassle-free.
Former principal secretary Abul Kalam Azad emphasised on policy consistency so that foreign investors can plan for a long time while investing in Bangladesh. He also underscored the importance of simplification of taxation system to increase the revenue collection.
NBR chairman Abu Hena Md Rahmatul Muneem called upon the business community to boost the local demand with adequate production increase as the government is giving more priority to increase the tax-GDP ratio, cut corporate tax and tries to ensure simplification of taxation.
