The soaring amount of nonperforming loans (NPLs) jumped to 11.5 percent of outstanding loans by the end of September, a figure kept artificially low by rescheduling not justified by borrowers' performance. It is apparently nothing serious, we are now being told by top bankers who are highly esteemed in their profession. Is the public expected to take them seriously?
If everything was hunky-dory, why did the government have to salvage some banks by doling out Tk 136 billion of taxpayers' money in the last seven years? If we have nothing to worry about, why have defaulted loans grown by 176.5 percent between 2009 and 2016? If it's not a big deal, how about giving the money back to the state's coffers?
A managing director of a bank said bankers were not responsible for NPLs because banks disburse loans after scrutinising documents of prospective borrowers. We understand there are times when things go beyond control of a bank's management, but to dismiss the problem out of hand is not only unprofessional but also unethical as it amounts to duping the depositors. The fact that poor management is behind the rise of NPLs is quite well established.
We are being told that even the collapse of Lehman Brothers in the US didn't raise much hue and cry as did the scandals in Bangladesh. Bank bosses are trying to assure us, but such a complacent and inappropriate analogy is extremely worrying.
The fact that the country is experiencing solid economic growth doesn't necessarily indicate that the financial sector isn't suffering from any crisis. Both can happen simultaneously. Moody's, a top international credit ranking service, has recently said the outlook for Bangladesh's banks is negative, “despite the country's robust economy.”
We believe that instead of self-serving laudation, the banks should address their poor record in managing banks. The press briefing would have been better utilised if we were informed about how they are planning to improve the management of the banks that is increasingly being overburdened by decisions and policies making the financial sector increasingly weak.