Home ›› 30 Dec 2021 ›› Front
As a regulator, Bangladesh Bank will have to ensure compliance in the financial sector to restore discipline, former governors and economists said on Wednesday.
The views and opinions came on the 2nd Bangladesh Economic Conferences-2021 held at a hotel in Dhaka themed ‘the central bank in a five-decade development journey’. Bangladesh Bank Governor Fazle Kabir presented the keynote at the conference, organised by financial Bangla daily Banik Barta.
Former BB governor Salehuddin Ahmed said that the regulations and norms in the financial sector are of international standard but there is no compliance. He said the central bank should ensure compliance with the norms and regulations but noted that over-regulation and over-relaxation are not good for the financial sector.
Mohammed Farashuddin, another former central bank governor, joined the conference virtually. He said BB would have to take immediate steps after receiving fraud allegations and suggested not to shelve investigation reports on financial corruption.
Subsidies or incentives on remittances and exports do not bring good results according to economic policy, said Farashuddin, adding that this should be stopped and local currency can be devaluated by observing the market with the assistance of experts instead of doling out subsidies.
He urged the central bank to emphasise SME enterprise for disbursing stimulus funds as larger borrowers got 80 per cent from funds amid the pandemic.
Prominent economist Wahiduddin Mahmud said that the country has many achievements and there have been many reforms in the financial sector. He said we did not know what regulation was needed to run a private bank and the necessary framework when licenses had been given to them.
“We have not learned the required rules in the case when a family grabs power in more than one bank,” he said, adding: “We will learn slowly.”
The former BB director said financial credibility and integrity would be crucial in the coming days.
“There are institutional weaknesses in Bangladesh,” said the economist, adding that this is an unpleasant truth but BB is the only institution whose governors are very efficient.
“The financial sector is the heart of the economy. Therefore, the Bangladesh Bank has a large role as a guardian of the financial sector in the country’s economic development,” said Mahmud.
Ha-meem Group of Companies Chairman AK Azad said that it is possible to reduce the defaulted loans if the government wants. The industrialist said that some defaulted borrowers go to BB and get approval for loan rescheduling, which should be stopped.
“The lending interest rate will fall if the defaulted loans are reduced,” said Azad.
Eight government banks accounted for 47 per cent of Bangladesh’s total defaulted loans, according to a BB report last month. The country’s banking sector recorded default loans amounting to Tk 1,01,150 crore at the end of September this year, and of that figure, Tk 47,632 crore are from the eight state-owned banks. This is an increase from Tk 47,520 crore in default loans recorded last June.
Former BB governor Atiur Rahman recommended an additional 1 per cent incentive on remittance earning to increase the growth. “We will have to move forward by dealing with the defaulted loans and climate challenges,” he added.
In his keynote, BB Governor Kabir said that addressing and reversing Covid-related economic shock and restoring the growth momentum are among the most crucial development challenges facing Bangladesh.
He said that while graduation from LDC would be an achievement of immense pride, it would also mean that LDC-related tariff exemptions and other benefits will be phased out gradually from 2027 onwards, requiring adequate preparation from all concerned, including the ministries and central bank.
City Bank Managing Director Mashrur Arefin delivered the welcome speech as the bank was the co-organiser of the event. Finance ministry’s Senior Secretary Abdur Rouf Talukder, Sonali Bank Managing Director Ataur Rahman Prodhan, Islami Bank Managing Director Mohammed Monirul Moula and others were present at the conference.
Ha-meem Group of Companies Chairman AK Azad said that it is possible to reduce the defaulted loans if the government wants. The industrialist said that some defaulted borrowers go to BB and get approval for loan rescheduling, which should be stopped.
“The lending interest rate will fall if the defaulted loans are reduced,” said Azad.
Eight government banks accounted for 47 per cent of Bangladesh’s total defaulted loans, according to a BB report last month. The country’s banking sector recorded default loans amounting to Tk 1,01,150 crore at the end of September this year, and of that figure, Tk 47,632 crore are from the eight state-owned banks. This is an increase from Tk 47,520 crore in default loans recorded last June.
