Banking sector distressed by reform failure: Dr Wahiduddin
Staff Reporter :
Bangladesh Bank’s banking reform roadmap is nothing new, but failure to implement it has distressed the financial sector, said eminent economist Dr Wahiduddin Mahmud.
“I have previously been involved with two banking reforms, so I am aware of them and implementations, but influential groups prevented its inclusion in the banking law,” the economist said at the launch of the fifth edition of Banking AImanac at the National Press Club in Dhaka on Saturday.
“Implementation is difficult when we don’t know what the previous regulation lacked,” said Mahmud, also a former adviser to the caretaker government.
He remarked that it’s not always wise to follow the recommendations of the World Bank and the International Monetary Fund, as the situation in Bangladesh is vastly different from other countries.
“Maximum limits must be set on interest rates. Otherwise weak banks will not get deposits, causing risks to businesses,” he added.
The banking sector is the heart of the economy, yet its “sorry state” is known to everyone, Dr Mahmud said.
The economist further said, “The government certainly wants that discipline returned to the financial sector. But the discipline is destroyed, when some individuals remain unpunished and the regulatory bodies lose their morality to enforce rules.”
“So, the unethical benefits should be stopped and must be kept the banking sector, the most sensitive area, free from political influence considering the entire financial sector,” he added.
“Currently, discussion is on to merge weak banks with strong ones. But the private commercial banks will not take responsibility for the weak banks. It could be possible, if the weak banks merge with government banks,” the economist opined.
He said, “A few scandal-hit large banks have not seen a decline in deposit collection as the depositors don’t care about the scam of the large banks. But the weak banks that cannot collect deposits, we do not need them.”
He further said, “Currently the condition of the financial sector is not good. Credibility of statistics is very important. Information about financial transactions needs to be more disclosed.”
“Banking Almanac provides information on total deposits and loans of banks. This will make it easier for people to consider whether they keep their deposits,” he said.
Dr Saleh Uddin Ahmed, former governor of the Bangladesh Bank and Mohammad Nurul Amani, former chairman of the Association of Bankers Bangladesh (ABB) and Chairman of First Finance and Investment Ltd, among others, spoke on the occasion.
