Delinquent borrowers on a joy ride but how long?

Dhaka,  Fri,  28 July 2017
Published : 12 Jul 2017, 12:04:12
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Delinquent borrowers on a joy ride but how long?

Delinquent borrowers on a joy ride but how long?
Mahmudur Rahman
So now we know, 200,000 plus persons are defaulting on their loans, pleading for interest waivers, rescheduling and hopefully they are in the two-million or so who file income-tax returns. The number must be correct as it comes from the Finance Minister, responding to a question in parliament.

What this number does is it presents the first step in tackling the problem. As income tax payers' assets of the defaulting loanee, wealth and liabilities must be listed in their returns and it should be easy for the National Board of Revenue (NBR) to re-check the returns. Whatever assets have been mortgaged can now be disposed of to balance out the loans and an empowered task-force can take steps ranging from attaching assets to freezing bank accounts.

Another interesting statistic that may well be revealing is the list of loans that have been 'written-off' as bad loans. Whether there's a connection between those who benefited from the bad loan write-off and the current defaulters might well prove interesting. A former Deputy Governor of Bangladesh Bank has said categorically that the banking sector has been pummelled into disarray.

And as always such disarray can't be corrected without preventive and curative measures that include holding borrowers and disbursing individuals accountable. If, as also alleged, political or board influence is responsible, hard-hitting reforms are required.

Bangladesh can no longer afford banks to be run as family or coterie concerns given that public moneys are involved.  The question has to be asked why multinational banks don't have bad loans anywhere near that, if public and private banks have. Whatever they're doing is working and ought to be emulated.

Far from that the matter continues to exacerbate-exemplified, sorrily enough by the recent discovery of another Tk 6.15 billion (615 crore) evaporating from a Sonali Bank branch allegedly through L/Cs that weren't honoured. Again, there is a list of some 58 companies or individuals who benefited. As it appears, the money is lost and the bank has had to absorb the loss.

Conceptually, bank bail-outs are unfortunate realities. External and unprecedented economic factors are permissible in the realm of risk. What isn't is negligence, cronyism, corruption and allowing 200,000 to play hockey with earnings of at least 2.0 million tax-payers, not to mention marginal savers.

mahmudrahman@gmail.com
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