The reported move to bail out a private bank can not be termed wise as the bank has already lost confidence of the depositors. The bank is in acute liquidity crunch due to huge irregularities in disbursement of loans and advances. Climate change fund of the government of over Tk.5.0 billion is one of many other government funds to have got stuck in the bank as the bank is unable to honour any payment against the account. Moreover, the bank is unable to pay requisite taxes and VAT for the government and maintain CRR and SLR which are mandatory requirements according to Banking Companies Act. Four state-owned banks and Investment Corporation of Bangladesh (ICB) have been asked to inject capital to the scam hit bank. The state-owned banks and the ICB however are known to be rather unwilling to do so and according to them it is again the depositors' or tax payers' money. The conditions of the four state owned banks are not good enough as they have been facing acute capital shortfalls and have already requested the government to replenish the capital shortfall of about Tk.200 billion. Although the government has set aside Tk.20 billion against their demands, the condition of the banks will further deteriorate if they fail to recover the money to be given as equity or loans.
Meanwhile, Bangladesh Bank instructed the directors of the bank under reference to inject Tk.2.0 billion as capital ever since the crisis started, but they have so far failed to do so.
The banking sector is already under pressure of liquidity crisis due to default loans of various business houses like Hallmarks, Bismillah Group and loan scams of Basic Bank, etc. Besides, the burden of non-performing loans (NPL) has been increasing with every quarter. Bangladesh Bank being the regulatory authority of the banking sector can not ignore its responsibility for the industry particularly after the recent scams. It should devote all its energy to recover the bad loans one by one and ensure discipline and good governance in the banking sector.
M Z Emran
A banker
© 2024 - All Rights with The Financial Express
