A minister’s moments of truth that flounder in inaction

Editorial

THE finance minister’s admission of Monday that growing non-performing loans, especially in state-owned banks, is the main problem in the banking sector contradicts with what he has so far maintained, saying that the problem is not as grave as it has been portrayed. A Centre for Policy Dialogue report early December said that Tk 225.02 billion had been plundered from 14 public and private banks through scams, irregularities and theft in the past one decade. The amount accounts for 39 per cent of the income tax collected in the 2017–2018 financial year. Three days later, the minister sought to term the report ‘just rubbish.’ Bad loans in the banking system have increased to about Tk 1,000 billion amidst lack of the political will required for the recovery of defaulted loans. The amount of loans in default, as of September, stood at Tk 993.7 billion, accounting for 11.48 per cent of the total of Tk 8,659.3 billion in outstanding loans in the banking system, as the latest central bank data show. The minister in the two consecutive tenures of the Awami League in office has on a few occasions turned around on what he earlier said. The minister’s saying no to a banking commission in early June and saving the task for the next government is another case in example.

The minister brushed aside the allegations of the banking sector being mired in lack of good governance that economists and experts have on many occasions come up with. But the Financial Institutions Division is reported in November to have planned a training programme for the bank directors to safeguard the interest of state-owned banks. While no people not good at safeguarding the interest of the banks should be on the boards, the decision that the directors need to be trained in banking governance hints at lack of governance. The minister also ruled out the chance for the institution for a commission on the banking sector but said that he would leave recommendations for the next government to arrest the high growth of non-performing loans. It is yet to be seen if the recommendations of the minister who could not stop the growing amount of loans in default, stop loan scams and iron out irregularities in the banking sector during two tenures of the government would at all effectively work for the next government, but this suggests that he has not ventured to play the good cards that he thinks he has up his sleeve — one of them is the institution of an independent banking commission that he is willing to leave for the next government.

In light of what has happened, it appears that the minister understands what has gone awry in the banking sector, as his belated admissions show, but he has only been unwilling, if not unable, to sort out the prickly issues. The banking sector, as statistics show, has been in a deplorable condition and people deployed in the banking sector may be responsible for all this. But the finance minister cannot shrug off the responsibility and he needs to be held to account.

• Courtesy: New Age /Dec 19, 2018