Banks, one of the leading pillars of the economy, plays a vital role in bringing prosperity to our country.
Unfortunately, over the past 15 years, this sector has been plagued with a record number of non-performing loans (NPLs), weak governance, liquidity shortage and frequent rescheduling of default loans. Now it is on the verge of ruination.
According to a report published in this newspaper on Wednesday, the defaulted loans hit an all -time high of Tk 211,391 at the end of June 2024.
Whereas, the non-performing loans was Tk 22,480 when the Awami League alliance came to power in 2009.
This default loan culture took firm root in our social fabric as the loan defaulters instead of being hated were enjoying impunity to the extent that their presence was vividly evident in the field of politics and policy-making.
The amount of loans surged tremendously throughout the ousted PM Sheikh Hasina’s regime thanks mainly to the nepotism, state sponsorship cronyism and culture of embezzlement in this sector.
Economists pointed out that the actual amount of defaulted loans in the banking sector would exceed Tk 4 lakh crore as half of the amount is stuck in lawsuits over the years.
As long as the cases continue, it will not be considered as default loans.
A local think tank, Centre for Policy Dialogue, recently alleged that in the last 15 years, governors of Bangladesh Bank and other state mechanisms helped the vested interest groups either by ignoring the existing rules or changing the laws to favour them.
In this context, it stated that S Alam Group took out about Tk 30,000 crore from Islami Bank Bangladesh only in 2022.
However, it is certainly heartening to learn that the interim government has decided to form a banking commission to introduce sustainable overhauling in this sector as it is overburdened with huge defaulted loans.
We hope that the proposed banking commission should be goal-specific, time-bound, transparent, inclusive and independent. It is expected that the commission will be able to identify the root causes that had led to the sorry state in the banking sector and determine which groups are responsible for this.
Side by side, it will also be able to bring public confidence back to the banking sector which has been enormously corroded owing to the persistent exacerbating condition of the sector.