Amendment that stirs up fury in JS

An amendment proposed by a ruling party lawmaker moments before adopting the Bank Company (Amendment) Bill on Wednesday infuriated the otherwise 'accommodative' opposition Jatiya Party members.
The amendment that proposed to raise the bank directors' tenure from nine years to twelve drew flak from some JP MPs, who eventually staged a rare walkout in protest. The JP lawmakers alleged that the original amendment bill, or the one recommended by the parliamentary standing committee on the finance ministry, did not contain any such provision. The amendment in question, they complained, was the outcome of the pressure exerted on the government by a section of powerful sponsor-directors of banks.
The amendment in question also suggested that banks did not treat the subsidiaries of 'unwilful' defaulters as defaulters while extending loans. The central bank is to determine whether a borrower is a wilful or unwilful defaulter. The parliament (Jatiya Sangsad) accepted the amendment along with others and passed the bill.
The extension of tenure and the provision to extend loans to subsidiaries belonging to the so-called 'unwilful' defaulters must have surprised many. No one expected such amendments when questions have arisen aplenty about the role of a section of directors of different banks. So, suspecting the involvement of some influential quarters in the inclusion of the amendments is quite natural. Experts feel that allowing some people to continue as directors for 12 years would promote instability in the banking sector and reduce the scope for other shareholders to get a place in the bank boards.
The adoption of the controversial provision in the Bank Company Act coincides with yet another concession extended by the central bank to the borrowers. In a circular issued on Tuesday last, the Bangladesh Bank (BB) said the borrowers whose loans were not treated as classified until April last will remain unclassified if they repay 50 per cent of their due instalments by June 30 next. The latest relaxation on loan repayment has not gone well with most banks that are now amid a liquidity crunch. Many banks are continuing their daily transactions by taking loans from the money market.
However, the relaxation of rules is nothing new. The central bank has been offering concessions even before the Covid-19 pandemic that struck the country in early 2020. The pandemic and the Russian-Ukraine war have only intensified the pace and rate of such concessions. The BB is found extending concessions to the borrowers some days ahead of June or December book closures. The move is aimed at meeting a couple of goals--- helping banks to window dress their non-performing loans (NPLs) and saving some influential borrowers from becoming defaulters.
This practice is a proven disaster for the banking industry which finds it truly difficult to bear the huge burden of NPL. Responding to the JP members' criticism of the bank sector management and regulator's role in Parliament, the finance minister, took satisfaction saying that the NPL ratio to outstanding loans had come down to 8.6 per cent in 2023 from more than 13.2 per cent recorded14 years back. The latest monetary policy however terms the NPL in the banking sector as a big burden. The 8.2 ratio is the second highest in South Asia after Sri Lanka.
The ratio does not tell everything. The volume of NPL, according to the latest Monetary Policy Statement, was Tk1.31 trillion at the end of March 2023. The amount was Tk 226 billion in 2009. The actual volume of NPL is always more than what the central bank data show. The amount under the rescheduling facility and written-off interest if considered, the total NPL size would be far bigger.
Given the current state of affairs in the banking sector, one can hardly pin hope on the much-expected reforms taking place anytime soon.

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