Notorious borrowers escaped defaulter list

Many commonly known bad borrowers have dodged the list of top 100 defaulters released in the parliament last week through sleight of hand, said Finance Minister AMA Muhith.

The list contained names that were little known. Asked why the names of notorious defaulters are missing from the list, Muhith said: “They are crafty -- they have rescheduled their loans.”

Many of the bad borrowers in the last three decades have become defaulters and regularised their loans through rescheduling, Muhith told a group of reporters at his secretariat office on Saturday.

A couple of years back, several widely known borrowers availed rescheduling facilities for 15 years. Still, they do not pay the instalments on time.

“Banks have become hostage to wilful defaulters,” said a bank official.

Muhith touched upon various issues, including budget implementation, in an informal talk with the journalists.

The implementation of the budget for fiscal 2017-18 will be a little difficult as the new VAT law was shelved at the eleventh hour, he said.

The new VAT law prescribed a 15 percent uniform VAT for most goods and services available in the country and was scheduled to take effect from July 1.

Its withdrawal at the last minute has left a gaping hole in the finance division's books, as this year's budget is the biggest in the country's history. “That's a problem and we have to tackle it,” Muhith said, adding that a meeting will soon be scheduled between the finance ministry and the National Board of Revenue to revise the revenue targets.

This time, the NBR has been given a revenue earning target of Tk 248,190 crore, Tk 91,254 crore of which will come from VAT. Last fiscal year, VAT receipts amounted to Tk 68,675 crore.  This means the new VAT law was supposed to yield an additional Tk 22,579 crore.

However, NBR officials say due to nominal GDP growth Tk 11,000 crore of additional revenue may be realised from VAT in the current fiscal year, Tk 5,000 crore of which would come from cigarettes alone.

Muhith said the revised budget may now be placed in the parliament at an earlier stage. Typically, the revised budget is presented in the first week of June.

“In theory, the VAT law is good but implementing it is very difficult. Its principle is wonderful as the burden will be distributed amongst all.”

But the basic assumption of the law is keeping account at every stage and it has to be kept accurately, which is not compatible with human character, Muhith said, while laughing off his failure to implement his plan.

Muhith also said there will be changes in four tax categories, which will be announced through executive orders (statutory regulatory orders).

The source tax on exports will remain the same at 0.70 percent this fiscal year instead of going up to 1 percent as announced in the budget, as the unit price of garment has fallen in the international market.

“Duty adjustment will be made on cigarettes too,” he said, without mentioning the other two changes to be brought in.