Giving banks carte blanche?

Despite unprecedented mismanagement prevailing in the banking sector, the finance minister has, surprisingly, chosen to stay mum on the issue in parliament. Both ruling party and opposition lawmakers came down hard on the minister for his inaction in the face of such disturbing financial irregularities. Ultimately, it is honest taxpayers who are bearing the brunt of such disasters in the banking sector. Already, the government plans to inject Tk 2,000 crore of taxpayers' money in the next fiscal year to help state-owned banks—including scam-hit ones—meet their capital shortfalls.

We fail to understand why, despite such overwhelming evidence of the misgovernance and corruption plaguing the sector, no concrete measures have been taken to bring in much-needed reforms. In fact, we seem to be going in the opposite direction. First came the amendment of the Bank Company Act which allows up to four members of a family to become directors and increases their tenure—a move which economists fear may lead to family "oligopoly" in banks. And now, in another bewildering move, the proposed national budget FY2018-19 has the corporate tax for banks reduced by 2.5 percent. Furthermore, a bank reform commission is yet to be formed—something the finance minister had earlier promised to do.

A banking sector held hostage to the dominance of loan defaulters, political influence, corruption and lobbying is anathema to any healthy economy. The banking sector, if left to its own devices, may jeopardise the leaps and bounds Bangladesh has made when it comes to economic growth and prosperity. The government needs to act fast to bring order to the sector by forming a reform commission which can help ensure that banks stop flouting regulations and contain the culture of bad loans. Instead of writing off loans and bailing out banks with hardworking taxpayers' money, the government must set an example by punishing those involved in the misappropriation of funds from the country's banks.