Bank
$986m remittance in first 12 days of October
Bangladeshi expatriates have sent US $986 million in remittance in 12 days of October, showing an upward trend of inward remittance flow in the legal channel.
Reforming non-bank financial institutions a long overdue
The economy of Bangladesh is currently under stress. High inflation, depleting foreign reserves and sluggish growth have eroded public confidence. Amid these issues, Bangladesh Bank has recently formed a six-member taskforce to conduct reform works in the banking sector.
Protecting weak banks is like pouring water into a leaky bucket
Dr. M M Akash, an esteemed economist and retired professor from the Economics Department at Dhaka University, has recently emphasized the need for confiscating the assets of large defaulters. He points out that many banks in the country are currently experiencing a liquidity crisis. For those banks that are likely to recover, refinancing could be a viable option, while alternative measures should be considered for those that are unlikely to survive. Dr. Akash shared these insights The white paper drafting committee is likely to assess the accuracy and realism of GDP growth indicators and other economic metrics published in recent years. The committee will review the sustainability of the development achieved and propose ways to ensure sustainable growth in the future. While the primary focus will be on macroeconomic issues, it remains uncertain whether the white paper will delve deeply into uncovering past irregularities and corruption. Key areas of concern include the reasons behind low growth rates, insufficient local and foreign investment, and the persistent issue of defaulted loans. However, it is unclear if the white paper will address these specific issues in detail. The concept of the white paper is to identify those responsible for past economic missteps and irregularities, but its exact scope will only become clear as the drafting progresses.
Willful loan defaulters are enemies of nation and economy
The banking sector in Bangladesh is in trouble. Renowned economist Dr. Ahsan H. Mansur recently spoke at a seminar organized by the Economic Reporters Forum (ERF) on the topic "Problems in the Banking Sector and Solutions to Overcome Them." He pointed out that the figures for non-performing loans (NPLs) reported by the Bangladesh Bank do not reflect the true picture. According to Bangladesh Bank's statistics, as of June, the amount of NPLs in the banking sector stands at approximately 1.83 trillion BDT. However, this figure does not include written-off loans, restructured loans, or loans involved in legal disputes.
No restriction on journalists entering Bangladesh Bank
The journalists boycotted the post-budget press conference chaired by the finance minister due to the ban on their entry to Bangladesh Bank. Traditionally, this annual event includes the governor's significant role in addressing questions on various economic issues such as inflation, government loans, liquidity crisis, defaulted loans, money laundering, and reserves. However, this year, journalists protested by refusing to attend the conference if the governor spoke, leading to his exclusion from the Q&A session. Consequently, questions that would typically be addressed by the governor were instead answered by Finance Minister, Prime Minister's Finance Advisor Moshiur Rahman, State Minister for Finance Wasika Ayesha Khan, and Finance Secretary Md. Khairuzzaman Majumdar.
In the perspective of free market economics, closure of all weak banks is necessary
In 2023, the Bangladesh Bank issued a circular titled 'Prompt Corrective Action Framework' to address the crisis of weak banks. The circular stated that if banks fail to improve their situation through the implementation of the framework, the Bangladesh Bank may take steps to consolidate them from 2025 onwards. Merger, or 'consolidation,' refers to the coming together of two or more companies into one. There have been extensive discussions and debates regarding the Bangladesh Bank's initiative to merge weak commercial banks with stronger ones. However, this arrangement is not truly a merger but rather a rescue operation for struggling banks.
Was devaluation necessary?
Under the crawling peg system, Bangladesh Bank has set the intermediate dollar price at Tk 117 and instructed banks to trade freely around this rate. A few days ago, economists advocated for a 'floating exchange rate' to maintain the dollar's value as fully market-oriented. They argued that the exchange rate between our currency and foreign currencies should be determined by market forces, with no authority intervening. However, Bangladesh Bank opted not to introduce a floating exchange rate, instead implementing the crawling peg system to manage the exchange rate. Unlike a floating exchange rate, a crawling peg system is not entirely free and open, as it involves some degree of control by the authorities. In this system, the upper and lower limits of the currency exchange rate are set, and the currency must be exchanged within these specified limits.
What does it indicate if deposit growth in banking sector slows down
A recent news article published in a national daily cited statistic from the Bangladesh Bank, indicating a decrease in deposit growth in the banking sector. Despite an increase in interest rates on deposits, depositors are now less inclined to keep their savings in banks as they used to.
BB decision over journos' entry remind about ancient monarchy
The parent organization of the financial institutions of Bangladesh is the Bangladesh Bank or the Central Bank. The recent decision by the Bangladesh Bank to impose restrictions on journalists' access to its premises has sparked controversy. According to the new policy, journalists can only enter the premises with specific authorization passes, and even then, they are restricted to meeting only the designated officials. Previously, journalists had unrestricted access to various departments of the central bank.
Factors to consider before bank consolidation
For a long time, the banking sector in the country has been plagued by various complex problems. Failures in recovering loans from defaulters engaged in fraudulent activities, inability to control internal malpractices and ensure good governance, increasing incidence of insider lending, and the proliferation of banks—all these complex issues have slowed down the normal functioning of the banking sector. It is primarily to address these problems that the decision to consolidate banks has been taken.
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