Banking criticism comes from ignorance

Finance Minister AMA Muhith yesterday downplayed the much talked-about criticism of the banking sector, saying it is not right at all.

“There is an impression in the market that the banking sector is very weak. It is because of ignorance,” he said yesterday at the inaugural ceremony of a five-day orientation programme for chairmen and directors of state-owned banks.

Those who criticise say the banking sector have gone beyond control, he said. Muhith, however, acknowledged that there are various types of problems in the banking sector.

“It prevails in the banking sector of all countries -- even in developed countries.”

He went on to criticise the bankers for the high non-performing loan ratio.

“After giving loan to an entrepreneur the bankers do not provide any assistance. They want the loan-taker to fall into default. Bankers need to change this attitude.” Another problem with banks is the continuous rescheduling of loans.

“This is an un-ending process,” he said, while calling for an upper ceiling to the number of times a business can take credit. 

“If the party cannot pay the loan it should be declared bankrupt. If necessary, the bank may give the entrepreneur loans for a new venture,” he added.

The banking division has arranged the orientation course for chairmen and directors in the back drop of criticisms that they do not discharge their responsibilities in the bank properly.

The chairmen and directors are paid for performing their duties in the banks, said Banking Secretary Asadul Islam.

“The government expects that they would discharge their responsibilities properly,” he added.

The government has to face much criticism for the high non-performing loans of the state-owned banks, said MA Mannan, state minister for finance and planning.

When a loan is given without proper appraisal, it inevitably turns bad, he said, while calling for punitive measures against bankers who do not carry out proper due diligence on loan proposals.

Bangladesh Bank Governor Fazle Kabir and Comptroller and Auditor General Muslim Chowdhury also spoke on the occasion.