Effective measures needed to recover defaulted loans
Currently, the country is experiencing an economic crisis. Amidst this crisis, the amount of defaulted loans has increased, along with tax evasion, inflation, and money laundering through hundi. A significant portion of these defaulted loans is being laundered abroad. The current economic crisis can be attributed to two main reasons: the rise in defaulted loans and the outflow of corrupt money abroad. Additionally, a decline in remittances and export earnings has led to a dollar shortage, further deteriorating the economic situation. This has prompted the Prime Minister to repeatedly warn the nation.
Due to the dollar shortage, production costs have risen, and inflation has reduced people's real income. However, people are unable to cut down their expenses, resulting in lower sales of produced goods. Consequently, businesses are experiencing a cash flow crisis, with a significant gap between income and expenditure.
A particular group of people evades taxes by underreporting the value of imported goods. This not only results in tax evasion but also facilitates money laundering. The governor of the Bangladesh Bank has warned that strict actions will be taken against those involved in such practices. However, the effectiveness of these warnings remains to be seen.
Money is being laundered from the country in various ways. The increasing trend of money laundering is reflected in the declining legal remittances. According to the Criminal Investigation Department (CID) of the police, 750 billion BDT (approximately) was laundered last year. The outflow of defaulted loans or corrupt money has impacted the country's reserves, leading to a rapid decline.
According to the Bangladesh Bank, the amount of defaulted loans now stands at 1.34 trillion BDT, which is one-fourth of the national budget. Experts argue that the actual amount of defaulted loans is much higher. The World Bank reports that Bangladesh has the highest rate of defaulted loans among its peers and competitor countries. This issue poses a significant challenge to the banking sector. It is perplexing why the government is lenient towards defaulters and money launderers. In most cases, defaulters are politically and socially influential, which, according to stakeholders, hinders effective government action to recover these loans. It is crucial to recognize that without strict measures from the government, recovering this massive amount of defaulted loans will be impossible.
Every stimulant of the economy is deeply interconnected. The increase in money laundering due to defaulted loans is reducing legal remittances, increasing the demand for dollars in the open market, and causing reserves to deplete rapidly. Therefore, without immediate and effective measures against defaulted loans, corruption, and the hundi system, there is a risk of a severe economic crisis in the country.
Leave A Comment
You need login first to leave a comment