That Bangladesh’s banking sector has continued to suffer due to ballooning non-performing loans (NPL) is in no way a pleasing state of affairs for the country’s economy. According to latest data, the amount of NPL amounted to Tk 65,731 crore at the end of September this year. With this the ratio of NPL now stands at 10.34 percent, which was 9.23 percent at the end of last year. The sum of non-performing loans is surprisingly huge even after a staggering amount of loans has been written off and rescheduled in the past years. The fact that annoys us most is that the bank authorities are showing little effort to establish good governance and curb irregularities of various forms that lie at the management level, even though the government has been injecting fresh capital in billions from hard-earned public money to keep the ailing banks alive.
Even after knowing it very well who are the longstanding big loan defaulters, banks have been surprisingly found to show serious reluctance in taking tough administrative and legal steps against them. What is even more shocking is the fact that those people and companies of dubious reputation of defaulting loans, year after year, are given out new loans of thousands of crores of taka even though there is little hope of recovery. It is also often seen that many bank directors influence management of the respective bank to disburse loans to their near and dear ones, who in most cases are such borrowers that they fail to repay their loans.
Nonetheless, keeping in mind the long-term damaging impacts that unabated loan defaults can put on the national economy, we must find some way out of this disturbing situation. To that end the role of the central bank as the regulatory body in this sector will be vital. It is amply clear from the current scenario that Bangladesh Bank has so far attained little success in this respect. It is highly desirable that the regulatory body takes a zero-tolerance attitude towards loan defaulters and also the corrupt bank high-ups, who patronize such anomalies. Yet even then there remains a question with regard to attaining full success in this regard. Informed people know very well how the Banking Companies Act itself has made the central bank incapable of applying its power against board members or the chairmen of the state-owned banks, which are suffering from defaulted loans most.
Therefore, in order to get full success in tackling the bad culture of loan default, the government needs to take measures to remove loopholes in the legal framework and make Bangladesh Bank powerful enough to address the issue strictly.