Despite huge remittances, rising exports, and maximum state-owned and private Banks Managing Director (MD) changes are not affecting the momentum in the Banking sector.
No visible steps have been taken to hold accountable those responsible for the organizational weakness, corruption and mismanagement in the country's banking sector for a long time. As a result, the crisis is not easily cut in this sector.
It is alleged that crores were looted from different banks with the help of the central bank during the tenure of the previous government. Former governors Dr Atiur Rahman, Fazle Kabir and Abdur Rouf Talukder have gone into hiding after the regime changed. Now the banks are paying for it and customers are suffering.
Meanwhile, almost three months have passed since the appointment of the new governor Ahsan H Mansur of the central bank, but people's confidence in the bank has not yet returned. Many customers are not able to withdraw money from the bank. There is resentment and dissatisfaction among the customers as they are unable to withdraw their money from the bank.
However, the liquidity of the banking sector is surplus after overcoming the acute crisis. However, the overall sector surplus did not end the unrest. There is a crisis in the sector. Lakhs of customers are passing days in fear due to lack of trust and instability.
In the meantime, the concerned people said that there is now an imbalance in the banking sector. On the one hand, the liquidity of the bank is increasing, on the other hand, the amount of money in the hands of the people is increasing. Most banks have excess cash in their hands, but some banks are unable to return customers' deposits. For a stable banking system, the reversal position of these indicators has to be eliminated.
According to Bangladesh Bank (BB), there is excess liquidity of Tk 1.9 trillion in the banking sector. This change is believed to have been due to the increase in depositors' confidence after the recent political changes in the country. Despite renewed confidence, private credit growth slowed to 9.86 percent year-on-year in August 2024. And this has played a role in increasing liquidity among the banks. In such a situation, the central bank has once again increased the policy interest rate. This will increase the interest on the loan.
As a consequence, Federation of Bangladesh Chamber of Commerce and Industry (FBCCI), Dhaka Chamber of Commerce (DCCI), Metropolitan Chamber of Commerce (MCCI) are worried about the latest initiative of the BB. They argue that if the interest on the loan increases, the pressure on their business activities will increase. In addition, new investment plans may have to be withdrawn. BB has increased the policy interest rate by 0.50 basis points to 10 percent.
This is the fifth time this year and the third time during the tenure of Governor Ahsan H Mansur that the policy rate has been increased. Basically, the interest rate at which commercial banks borrow from BB is called repo rate or policy interest rate.
It is to be noted that this is the first time that the policy interest rate has exceeded the inflation rate. As a result, interest rates on deposits have increased. But the banks are not able to collect money according to the demand. Several banks are unable to pay their customers due to non-availability of money.
Customers are not getting the money they want to withdraw money from weak and Shariah-based banks, in addition to going to a bank booth for the last two months, it is said that there is no money, network problem, maintenance problem etc. Again, someone's online transaction is closed.
Many are also worried about the money. Unpleasant incidents are also happening in bank branches in different areas of the country. They were also seen blocking the road, lock the branches of the Banks without getting money. Many people have been unable to withdraw money from the bank even after waiting for the last two months.
In such a situation, many people have given up keeping money. Especially due to political changes, people have reduced the amount of money kept in the bank. Besides, the breakdown of some banks has reduced people's confidence in the banking sector. As a result, the amount of cash in the hands of people outside the banking sector is increasing.
Economists said that the interim government has already taken various initiatives to reform the banking sector. However, it should not be limited to reform, but also work to keep the confidence of the bank's customers or depositors intact. Initiatives should be taken first so that people are bank-oriented with confidence.
ZH
