BB needs full autonomy

The government should give full autonomy to the central bank to perk up the ailing banking sector or else the industry may collapse, analysts said yesterday.

For instance, the central bank does not have any executive power to dissolve the board of state-run banks, said Khondker Ibrahim Khaled, a former deputy governor of the Bangladesh Bank.

“Once BASIC was one of the good banks in the country but the financial health of the lender has started deteriorating since 2010.”

But the central bank failed to dissolve the bank’s board despite being informed of wide-ranging corruption.

Khaled’s comments came at a seminar on the role of bankers in implementing the proposed budget for fiscal 2019-20, organised by the Association of Bank Officers Bangladesh at the National Press Club auditorium in Dhaka.

The government should amend the respective acts to give full autonomy to the central bank.

“If the ongoing situation continues, the banking sector may collapse in the days ahead,” Khaled added.

Finance Minister AHM Mustafa Kamal did not give any clear direction in the proposed budget for fiscal 2019-20 on how to mitigate the existing crisis in the banking sector, said Toufic Ahmad Choudhury, a former director general of the Bangladesh Institute of Bank Management.

“The government said it would take punitive measures against the habitual defaulters. But there has been no explanation in the proposed budget about who the wilful defaulters are,” he added. Bankers should focus on strengthening their monitoring on the big loans as the habitual defaulters usually take those, said Ahmed Firoz Kabir, a member of the parliamentary standing committee on the finance ministry.

Jamaluddin Ahmed, a director of the BB; Md Akhtaruzzaman, economic adviser of the central bank; and Mohammad Ismail, chairman of Bangladesh Krishi Bank, spoke among others.