Cenbank fails to check crony capitalism

Irked by the dollar manipulation, Bangladesh Bank asked for explanations from banks in August 2022.

This time, after one year, the central bank is threatening to penalise the treasury heads of some banks.

According to a media report, ten banks were asked to clarify their position over the high exchange rates.

If the above-mentioned banks fail to explain about their making heft profit charging dollar exchange rate higher than that is fixed, the regulator can slap fine on the errant banks up to Tk one lakh each.

Last year, the central bank asked Dutch-Bangla, Southeast, Prime, City, Brac and Standard Chartered banks to transfer their treasury heads to the human resources department as punishment for dollar manipulation but due to unknown reasons backtracked from slapping the penalty.

The central bank, particularly its monitoring mechanism in recent years, has been losing its shine, exacerbating the pandemonium in the country’s banking sector.

In 2010, the top banking regulator appointed an overseer in Islami Bank Bangladesh Ltd to monitor the deviation from banking rules and principles but for mysterious reasons the central bank representative was withdrawn.

Cashing in on the absence of criminalisation of crony capitalism, which helps to loot money from banks, S. Alam Group took Tk 30,000 crore alone from IBBL but the group was merely entitled to get a maximum Tk 215 crore.

The central bank failed to rein in the hike of overall non-performing loans (NPL), worsening the financial health of the banking sector.

As of May 29, 2023 NPL rose to Tk 131, 621 crore, thanks to lax monitoring and regulatory forbearance particularly in the space between 2020 and 2022.

The trust deficit many of the commercial banks suffer from is due to central bank’s lax monitoring as well as working under political influence for vested interest groups.

As a result of which, the banking system of Bangladesh is now in tatters. Bangladesh Bank will have to accept its failure.