Staff Reporter :
Dr. Ahsan H. Mansur, Executive Director of the Policy Research Institute (PRI), has expressed concern over Bangladesh’s increasing dependence on loans amidst growing financial distress.
He highlighted that this dependency is reducing the country’s borrowing capacity, causing disappointment from India and a lack of response from China.
Dr. Mansur noted that the government is struggling to collect sufficient revenue for budget implementation.
The scarcity of funds and dollars is hindering budget execution, leaving the government unable to pay bills in various sectors, including energy.
Speaking at a discussion on “Causes of Distress in the Banking Sector in Bangladesh,” organized by the Economic Reporters Forum (ERF) in the city, Dr. Mansur criticized banks for showing profits through the classification of interest on loans.
He argued that banks are distributing dividends from these illusory profits and the government is collecting taxes from them, despite the banks not earning actual income.
This practice, he said, is essentially looting depositors’ money.
Dr. Mansur used a metaphor to illustrate the unsustainable nature of this practice, saying, “We are selling the plates to buy biryani.
How long can banks continue to operate like this? Deposits will run out, and the banks will not be able to return the depositors’ money.”
Calling for comprehensive reform in the financial sector, he accused the authorities of intentionally keeping problems in the bank
ing sector unresolved.
He likened this to “sweeping the smelly dirt under the carpet,” warning that the underlying issues will eventually resurface.
Highlighting various attempts to conceal irregularities in the banking sector, Dr. Mansur stated, “This act of hiding information is causing the stench of irregularities in the banking sector to spread throughout the economy.
Hiding bad loans, irregularities, corruption, and money laundering will not solve the problems of this sector.”
He continued, “It was said before the elections that extensive reforms would be brought to the financial sector. But six months have passed, and nothing has been done so far.
This is very disappointing. For the sake of the country, an initiative must be taken to clean up the financial sector. It should be initiated by the government and involve the Bangladesh Bank.”
Dr. Mansur further explained, “The data from the Bangladesh Bank shows non-performing loans at 11 percent, but in reality, they are around 25 percent.
The financial sector cannot continue like this for much longer. Due to a lack of supervision, we have lost control of our currency market, and inflation has exceeded beyond our control.”
“This has increased irregularities and created a crisis of confidence. A situation has now been created where the banks cannot even save themselves. How will they then secure the depositors’ funds?” he questioned.
He also acknowledged that while the government has garnered praise for constructing infrastructures like the Padma Bridge, this is now being overshadowed by high inflation, bad loans, and financial scandals.
“The responsibility for these issues lies with the Bangladesh Bank as the regulatory authority. If initiatives are not taken now, a major crisis will develop in the country’s banking sector,” he warned.
Dr. Mansur noted that the growth of bank deposits currently stands between 8.5 and 9 percent and could potentially reach up to 10 percent by the end of the year. He projected that deposits might total approximately Tk170,000 crore this year.
He raised concerns about how banks would meet the fiscal year’s budget target if the government borrows Tk137,000 crore. “Where will the private sector find the money?” he questioned.
The PRI executive director pointed out that the budget anticipated a 27 percent growth for the private sector.
However, private sector investment has been fluctuating between 22 to 23 percent so far.
He questioned how the 27 percent growth target would be achieved if bank deposit growth does not increase while the government requires substantial lending.
The event was chaired by ERF President Refayet Ullah Mirdha and moderated by its General Secretary Abul Kashem.