Bank
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.
Simple discussion on some theories of banking and economics
In words, it is said, 'Not knowing something is not wrong, unwillingness to learn is wrong. And the biggest crime or injustice is pretending to know without knowing. Many among us are reluctant to show interest in learning about unfamiliar subjects. They behave as if they already know everything. Many try to display expertise in a subject they don't actually know well themselves. It's impossible for a person to know everything. However, continuous efforts to learn are necessary so that one doesn't get trapped or humiliated in the net of ignorance. Mutual exchange of ideas can be considered the best way to acquire knowledge on a subject. Those of us who work with or discuss banking and economics often need to familiarize ourselves with various new terms or concepts. Without having basic or fundamental knowledge about these, one tends to become embarrassed. Therefore, let's discuss some terms or concepts related to banking and economics that we come across almost daily. It's worth mentioning that the discussion here will be very general and not from the perspective of an expert. Therefore, misunderstandings or misconceptions are natural.
Bank mergers, acquisitions, or dissolutions?
Bangladesh has recently received approval for a loan of 470 million US dollars from the International Monetary Fund (IMF). The first installment of the approved loan has already been disbursed in favor of Bangladesh. Former Finance Minister A.H. Mustafa Kamal, after the approval of the IMF loan for Bangladesh, had stated in an interaction with journalists that Bangladesh has received the loan approval from the IMF just as it had requested. However, the former finance minister's statement was not entirely accurate because the IMF does not provide loans to any country without conditions. Perhaps the conditions for the loan might vary from country to country, being somewhat stringent or lenient.
We need to be more cautious about borrowing foreign loans
After gaining independence, an American development economist visited Bangladesh and delivered a speech to Dhaka University's faculty, addressing the sluggish pace of the country's economic development. In the midst of his presentation, a young professor from Dhaka University boldly asserted, "Our development is stymied by unnecessary interference in our economy from external sources like yours." Upon hearing this critique, the American professor paused before responding with a stark observation: "Consider that 80 percent of your nation's economy relies on debt from countries like ours." This revelation left the young professor speechless for the remainder of the discussion, underscoring the harsh reality of Bangladesh's economic dependency.
Is it possible to identify 'willful defaulter'?
Bangladesh Bank's March 12 circular aimed at identifying 'willful defaulters' has sparked significant attention within the banking sector. Economists and bankers are closely monitoring the situation, with many hopeful that it will lead to the apprehension of those deliberately defaulting on loans. Economists have persistently advocated for two key measures to tackle the escalating Non-Performing Loan (NPL) crisis: stringent action against willful defaulters and comprehensive reforms to reduce overall NPL levels to a sustainable threshold.
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