Appoint ombudsman for banking sector

With defaulters securing important positions in the government and corporate governance remaining extremely weak, it is not possible for the banks to recover the huge volume of non-performing loans from defaulters, observed economists, bankers and civil society members at a function in Dhaka Saturday.
Prof. Dr Mainul Islam, a noted economist while presenting the keynote paper at the function organised by Shujan (Citizens for Good Governance) at the Jatiya Press Club, mentioned the name of a particular individual and described him as the 'country's biggest loan defaulter'.
He alleged that the government was not sincere in its efforts to recover classified loans. It is just playing an "arranged game" in the name of loan recovery.
"The classified loans in the banking sector will never be realised with this kind of game being in place or played out", he said.
Dr Islam, who authored a book titled 'A Profile of Bank Loan Default in the Private Sector in Bangladesh', said all the ruling parties have been patronising bank loan defaulters.
He alleged that the incumbent finance minister started taking absurd decisions on default loans, mainly to hide the accumulated volume of soured loans.
The former director general of Bangladesh Institute of Bank Management said the actual volume of classified loans would be around Tk 3.0 trillion or 30 per cent of the total outstanding loans.
Most banks were given permission on political considerations. The directors are either politicians or they have links with politics. These people are making profits on depositors' money, he said.
"Most or all the loan defaulters are wilful defaulters and they have decided not to pay back to banks due to their political connections."
"This is a classic example of political corruption in crony capitalism," Dr Islam said.
He said bankers and policymakers do know the real reasons, but nobody wants to address those and recover the classified loans.
The economist said all political parties have an agreement on allowing misappropriation of banks' money. So, they have never used the bankruptcy act.
He placed a set of recommendations that included a call for trying of top 10 loan defaulters of each of the banks in a tribunal.
Dr Islam suggested appointment of an ombudsman for the banking sector and formation of an asset management company to deal with bad debt.
He recommended arresting and confiscating passports of key persons of top 10 defaulting organisations, annulling financial institutions division to strengthen Bangladesh Bank and merging weaker banks with stronger ones.
He also demanded accentuated measures for bringing big corporations in the capital market.
Former central bank deputy governor Khondkar Ibrahim Khaled felt that the prime minister can solve existing crisis in banking sector the way she has done in the case of illegal casinos.
"But will it really happen?" he questioned.
Without naming anyone, Mr Khaled said there is one person in the government who reigns supreme in banking sector like Samrat used to reign over casinos in Dhaka city.
"He looted banks, he looted the capital market and he is now looting everywhere," the former central banker said.
Mr Khaled led a three-member committee to investigate the capital market debacle in 2009-2011.
Former Agrani Bank managing director Syed Abu Naser Bukhtear Ahmed said banks are failing mainly for poor governance, adding that almost all the classified loans are politically directed.
He said some former Chhatra League leaders were placed on Agrani Bank board of directors when he was the managing director.
From day one, Mr Ahmed said, they sought "special favour" from the bank.
Prof Dr Rashed Al Mahmud Titumir of development studies department at Dhaka University said a big sum of money is now smuggled out of the country.
This smuggled money has something to do with classified loans, he asserted.
He also alleged that the country's GDP rate is a made-up one.
Bangladesh Nationalist Party lawmaker Rumeen Farhana said nothing happens without the PM's directive and nothing will also happen in banking without her order.
Bangladesh Communist Party leader and former banker Kafi Ratan said it is an open secret that political leaders take 6.0-7.0-per cent commission against recommending loan cases.
"So, it's natural that these bank loans will be classified," he added.
Former adviser to a caretaker government Hafizuddin Khan said democracy and good governance are the only solution to this crisis which is elusive in Bangladesh.
Mr. Abul Moksud said when every system is in ruins or unsettled, the banking sector cannot escape the rot.
SHUJAN secretary Dr Badiul Alam Majumdar moderated the programme.
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