Indiscipline in financial sector worries economists

Noted economists of the country expressed Saturday their concern about the prevailing indiscipline in the financial sector, specially in the growing non performing loan (NPL) saying it will ultimately enhance the macroeconomic vulnerability.
They stressed on immediate reforms of the financial sector by forming a banking sector commission to protect the macroeconomy.
"The recent media reports about the banking sector indicates that we have gone several years behind. The government should take note of the situation and every conscious citizen should be aware about the issues," former adviser Akbar Ali Khan said.
The former adviser to the caretaker government suggested the government to take note of the situation prevailing in the banking sector those are being exposed through media reports.
His remarks came during a book launching ceremony on 'Selected Macroeconomic Issues: Theory and Practice' on the Daily Star premises in the city. World Bank (WB) lead economist Zahid Hussain, Dhaka University professor MA Taslim and Centre for Policy Dialogue (CPD) executive director Mustafizur Rahman discussed on the book at the programme while Akbar Ali Khan chaired the event.   
Referring to Mirza Azizul Islam's essay on the weakness of the banking sector of Bangladesh, Akbar Ali Khan said it cannot be directly said that the overall economy will be destroyed for the weakness of the banking sector but if this situation persists there will be an adverse impact on the macro economy.        
Mr Khan also warned about the poverty reduction claim in the country saying the consumption bundle on which poverty was estimated was in 1972. If two dollar income per day is considered then, about 80 per cent people will be in poverty level.
"The 26 per cent claim of poverty in the country is not established on a strong basis. Besides, as per the nutritional status of World Health Organisation (WHO), Bangladesh has more poverty than the sub-Saharan African countries," said Mr Khan.  
Mustafizur Rahman said a banking sector commission should be formed. The financial sector is in a catastrophic situation, specially when the non performing loan has crossed 10 per cent.
Citing example of India, he said when India's GDP growth declined to 4.5 per cent from 9.0 per cent even then the percentage of outstanding loan was 2.5 per cent to 3.0 per cent.  
Mirza Azizul Islam said the basic element of monetary policy is absent in Bangladesh. That's why he has written very little on monetary policy of the country in his book. He expects to write more on the issue in future.
He said removing inequality depends on the expenditure of the government and not on taxation. He noted dependence on aid does not necessarily imply that Bangladesh has developed a lot. Rather effectiveness of aid should be increased here.
Zahid Hussain said Mirza Aziz's comment on poverty reduction and inequality in Bangladesh is bold when he says in the present context the country needs to focus more on poverty reduction rather than inequality.  
He said the book of Mirza Aziz should be a textbook for the students as the essays are based on data and information and logics.
MA Taslim said aid could bridge the gap between savings and investment.
While making comment on the book he said Mirza Aziz could have more insight on how the policy world works as he has observed the situation from a top position.