Banking sector is not free from flaws

Finance Minister AMA Muhith yesterday admitted in parliament that the country's banking sector was not completely without problems.

“The banking system is not completely free from issues. I don't think there is any shortage of efforts to make it free from flaws. It will take more time to execute the measures,” he said.

The minister was responding to a private member's resolution on ensuring transparency and accountability in running banks and financial institutions, reports UNB.

Awami League lawmaker Israfil Alam tabled the resolution at the House, with Speaker Shirin Sharmin Chaudhury in the chair.

The Jatiya Sangsad on Tuesday passed the Banking Companies (Amendment) Act 2017 amid criticism from various quarters that the revised law would help a single family tighten its hold on a private bank.

The new law stipulates that the tenure of a private bank's board of directors will be nine years, up from six years. Besides, four members of a family, instead of two, can be in the board.

Experts and economists expressed concern that the amended law would worsen the current troubles in the banking sector.

Parliament passed the law at a time when the country's banking sector has been hit by several scams.

“Let transparency and accountability be ensured in running banks and financial institutions without anomalies and flaws,” the MP said in his resolution.

The finance minister pointed at various measures taken by the government to ensure good governance in the financial sector.

“Irregularities and flaws have been prevailing in the sector since the birth of the country and once it had taken a serious turn. The rate of default loan had hit 32 percent. Now it has come down to 11-12 percent.”

Muhith said ensuring good governance in the banking sector is a continuous process. He requested Israfil to withdraw the proposal and the MP complied.

Israfil in his resolution also said they often felt embarrassed by the problems or criticisms over the financial and banking sector. “It makes us speechless and frustrated as well.”

He said the government and parliament were being blamed for the failures in implementing laws and checking irregularities in the banking sector.

Naming some banks, including Farmers Bank, AB Bank, NRB and National Bank, Israfil said the government's successes on the economic front have largely been marred by some irregularities in the banking sector.

The amount of default loan in state-run banks also rose, the lawmaker pointed out. “There were incidents of taking loans on fake names. Directors of banks and senior officials were involved in such activities.”

“Despite the looting of money, the government has to provide the banks with several thousand crore of taka. This is the money taxed from the people,” he said.

The ruling party MP called upon the government to cancel the licences of those banks who failed to meet certain conditions.

“Why the licences of the banks which failed to meet the conditions are not cancelled? Why their licences are being renewed?” he questioned.

The lawmaker form Naogaon-6 said the government should announce the names of the loan defaulters.