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Ending the culture of bad loans

  • Published at 11:58 pm May 17th, 2019

This culture of corruption and subsequent bad loans must be taken seriously

There is no denying that our banking sector is currently suffering from a crisis, with default loans having soared to over Tk90,000cr as of February this year. 

The fact that this amount has continued to increase over the last few years is worrisome to say the least.

The reasoning behind this is simple: Corruption, nepotism, favouritism, and political might have continued to wreak havoc when it comes to borrowing and have resulted in an industry that is on the brink of the collapse. 

The situation is undoubtedly further exacerbated by the fact that this corruption is prominent not only in state-owned banks, but also in the private sector. 

As of March this year, of the total amount of defaulting loans, more than half were owned by state-owned banks, indicating the widespread nature of the problem within the sector.

With Bangladesh Bank continuing to incentivize the practice by offering huge waivers to loan defaulters, the situation has continued to get worse. 

This culture of corruption and subsequent bad loans must be taken seriously and eliminated at the root. 

It must be understood that a functioning and healthy banking sector is instrumental for the sustainable growth of the economy. And with the banking sector’s default loan amount increasing with each passing month, in the long run, this could be disastrous for the nation and bring our growing economy to our knees.

Bangladesh has made such great progress in the last decade and it would be a shame to let all that go to waste due to the greed of a few powerful individuals within the banking industry.

We must continue to incentivize good borrowers and punish those who risk the economy by lending money to those who have yet to earn it. 

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