Logo of Phnom Penh Post newspaper Phnom Penh Post - Bangladesh banking sector now ‘hostage’ to only a few

Bangladesh banking sector now ‘hostage’ to only a few

Content image - Phnom Penh Post
A Bushra Money Exchange Ltd clerk in Dhaka counts money in front of an electronic board showing the new rates of the Bangladeshi taka. AFP

Bangladesh banking sector now ‘hostage’ to only a few

Bangladesh’s Centre for Policy Dialogue (CPD) on Saturday welcomed the government plan to set up a banking commission in order to save the ailing sector riddled with bad loans, irregularities and weak governance.

“We are excited to learn that the highest political level has given consent to formation of a banking commission. We think that it is a very judicious decision,” said Debapriya Bhattacharya, a distinguished fellow of the CPD.

He was speaking at a media briefing on the proposed bank commission at Brac Centre Inn in the capital’s Mohakhali area.

Fahmida Khatun, executive director of the think-tank, said they were hopeful that the proposed commission would identify the main problems in the banking sector and identify the groups who were “holding the sector hostage”.

She demanded the commission consult the stakeholders, including savers, businesses and think-tanks, before finalising its report.

Their comments came three days after Minister of Finance Mustafa Kamal told reporters that the government planned to form a commission for the banking sector.

Last month, the International Monetary Fund said high and increasing default loans and weak governance in the banking sector, especially in the state-owned banks, remained major policy challenges.

The actual size of bad loans was more than double the officially recognised figure, the lender said.

Official statistics show that bad loan stood at about one trillion taka ($11.8 billion) in December.

Debapriya on Saturday said this was not only a matter of bad loans.

“Bad loans have increased despite hundreds of promises and various incentives.

“But beneath it lies capital and provision shortfalls in banks and there is a fall in profit margins.”

The economist said people’s tendency to deposit their money in banks was becoming weaker.

There was also a problem related to the interest rates both on deposits and loans for investment, he added.

“What is more worrying is that the central bank’s judicious guidelines are being breached in broad daylight.

“These violations are sometimes tantamount to illegal activities. As a result, agencies such as the Anti-Corruption Commission have to get involved in the banking sector.”

He said the statistics of the central bank show that “the banking sector has now become hostage to a handful of people and groups”.

The CPD has been calling for forming a banking commission since the Hall-Mark Group scam came to light in 2012. The little known business group siphoned about 40 billion taka from the state-run Sonali Bank.

Debapriya, who was involved in a committee that worked in 2002 to amend the Banking Companies Act, said: “The crisis in the banking sector was initially an economic problem.

“Later, it snowballed into a political-economic problem. It’s now a completely political problem,” he said.

The economist wondered whether the commission would only look into the banking sector or rather expand its coverage into the non-banking sector as the situation at the non-banking financial institutions was “far worse than the banking sector”.

He asked whether the commission would also look into the role of the central bank.

“What are the problems the central bank is facing in overseeing the banking sector? The central bank is empowered legally.

“It remains to be seen whether the commission would explore why the central bank doesn’t exercise its full authority.”

Debapriya demanded the commission come up with some interim solutions to deal with urgent issues before finalising its report.

He said there was a crisis of trust and transparency in the country’s banking sector.

The proposed commission would have to work to ride out the crisis, he added.



  • Hun Sen says Kingdom not a 'satellite country'

    Prime Minister Hun Sen said Cambodia had sent diplomatic notes to various embassies demonstrating its stance and clarifying allegations that the Kingdom is a satellite country of China which will allow it exclusive access to the Ream Naval Base in Preah Sihanouk province. The response

  • Vast Prince Manor fun park opens to much fanfare in Kandal

    Chinese-owned Prince Culture and Development Co Ltd officially launched the $85 million Prince Manor entertainment centre in Kandal province on Wednesday. Prince Manor is located along National Road 1, 20km from the centre of Phnom Penh. It is the first major theme park project in Cambodia and

  • Angkor provides ‘valuable’ water storage

    The Apsara National Authority (ANA) has stored millions of cubic metres of water at reservoirs in the Angkor area after Cambodia experienced a series of rainstorms over the last few days. The storing of the water, besides serving temple conservation, will also be used to

  • Floods prompt evacuations in Kampong Speu

    Rain-induced floods and water flowing from Kampong Speu province have submerged the houses of 1,527 families living close to the Prek Thnot River in Spean Thma, Tien, Kong Noy and Roluos communes in Phnom Penh’s Dangkor district, according to data from local authorities. Spean Thma

  • Serving coffee with a side of robots

    The eye-catching glass building surrounded by greenery at the intersection of Streets 371 and 2002 in Phnom Penh’s Sen Sok district is more than just another coffee shop where you can while away a few hours. UrHobby House cafe is filled with robots and characters from

  • Cintri strike ends, workers’ contracts to be terminated

    CINTRI (Cambodia) Ltd rubbish collectors who have been on strike for the past 13 days agreed to return to work starting Wednesday evening after the company agreed to terminate their contracts at the end of January next year and provide seniority payments and other benefits to