# Condition of the country's 24 banks is very critical
# Proposal for formation of independent banking commission
# CPD calls for cancellation of FID to restore autonomy of BB
The country's banking sector is now 'clinically dead' due to corruption and partisanship of the Awami League government.
Economists alleged that in the last 15 years, more than two dozen banks in the country have almost crippled the sector by distributing fraud loans, laundering money abroad and embezzling bank money.
Most of the third and fourth generation banks have been named in the list of sinking banks. The share price of some of these banks is less than a cup of tea.
Meanwhile, former land minister Saifuzzaman Chowdhury has laundered a huge amount of money abroad using UCBL Bank as his family property. The board of directors of Krishi Bank, owned by former home minister Mohiuddin Khan Alamgir, was dissolved due to widespread corruption. Although the name of the bank was changed to 'Padma Bank', it is also in a sinking state.
The story of irregularities and corruption of former BASIC Bank chairman Sheikh Abdul Hye Bachchu is known to all quarters of the country. S Alam, a Chattogram-based industrial group close to the government, owns seven banks, including Islami Bank Bangladesh, the largest bank in the private sector.
The group is accused of laundering around Tk 53,000 crore. Abdur Rauf Talukder, the recently resigned governor of Bangladesh Bank, the regulatory body of the financial sector, assisted in this. Although a large amount of money has been laundered, the group has also stopped investigating the laundering of the court using the influence of the court.
In this way, about 24 banks of the country are drowning with fraud loan disbursement, looting and huge amount of defaulted loans. State-owned Sonali, Janata, Rupali and Agrani Bank were not excluded from the list. The central bank's latest board has reprimanded Sonali and the public for aggressive loan disbursement and recovery, except for Rupali and Agrani Bank.
At a press conference in the capital yesterday, the Center for Policy Dialogue (CPD), a private research organization, said that in 15 years from 2008 to 2023, about Tk 92,261 crore was embezzled in 24 big bank scams. The information was given at a press conference titled 'What to do to bring back good governance in the banking sector'.
CPD Executive Director Fahmida Khatun said, "Commercial banks have to be strengthened, independence of Bangladesh Bank has to be upheld and timely accuracy and availability of information has to be ensured. The CPD has recommended the formation of a precise, time-befitting, transparent, neutral, inclusive and independent banking commission to bring transparency in the banking sector. The reform must be political, as vested interests will obstruct it."
Mentioning that the condition of several banks is critical, the CPD said that the banks on the verge of collapse should be closed.
According to the CPD, the amount of embezzled money is equivalent to about 12 percent of the national budget or two percent of GDP for the fiscal year 2023-24.
CPD executive Fahmida Khatun said most of the third and fourth generation banks are now 'clinically dead'. I don't have a precise number of how many are ‘clinically dead’. We have seen that the third and fourth generation banks are not running at all. They can be called "clinically dead."
Dr Fahmida also commented that Islami Bank has been weakened through acquisition.
She also suggested abolishing the boards of these banks, changing the management and bringing them back to the previous state.
The CPD executive suggested forming a banking commission with some experts for reforms in the financial sector, saying that there is no need for a separate room or manpower or institute for this. This commission will identify the problems of the banking sector and recommend solutions to the finance ministry.
The economist also urged to follow the rules and regulations to strengthen the financial institutions and increase transparency in recruitment.
The CPD also recommended closing down the Financial Institutions Division (FID) of the Ministry of Finance to restore the autonomy of Bangladesh Bank.
Mustafizur Rahman said, there are central banks in all countries of the world. Does a separate agency control the central bank in this way? We had removed FID in our country. If we can give independence and autonomy to the central bank, and if it is accountable to parliament, then such a dichotomy is not necessary.
Alleging irregularities in the appointment of chairmen and directors of state banks through FID, Mostafizur Rahman said, "We have seen how this is done without following the rules and regulations. If we can strengthen the central bank, free it from political influence, then we can be sure that we can do it even if there is no FID."
CPD Executive Director Fahmida Khatun also believes that as an autonomous organization, Bangladesh Bank will be able to handle all aspects of itself. According to him, the time has come to abolish the FID department. This is contradictory to the independence of Bangladesh Bank.
The Bangladesh Bank Order was issued in 1972 to run the activities of Bangladesh Bank. Through which Bangladesh Bank itself could conduct all its activities.
The CPD alleged that the FID was formed to influence the activities of Bangladesh Bank.
Fahmida Khatun said the banking sector needs to carry out detailed structural reforms to support its economic contribution. It requires political will. Something we haven't seen in the past. Under the interim government led by Dr Yunus, we hope that they will try to revive the banking sector and other sectors of the economy. Bank licenses should be stopped without thorough analysis.
The CPD also demanded that those responsible for the investigation and administration of every financial scam made by the central bank be punished.
CPD Distinguished Fellow Prof Dr Mustafizur Rahman and Research Director Khandaker Golam Moazzem were present at the press conference.
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