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Banking sector in a black hole

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02nd-Jul-2019       
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SIX of the eight State-run banks faced capital shortfall in the first quarter of the year. This situation was obvious because the government didn't take any action against the bank authorities for unwisely wasting public money in the name of issuing default loans. Quoting Bangladesh Bank data, the newspaper reported that as of March, Agrani, BASIC, Janata, Rupali, Bangladesh Krishi and Rajshahi Krishi Unnayan had combined capital shortfall of Tk 15,953.41 crore.
The government has not stopped injecting capital into the State-owned Banks every year though economists have opined negative about the process terming it a bad practice. We also repeatedly penned down pinpointing that this cannot be a good method for the State-run Banks to continue their operation. What's frustrating is that there has been no improvement in their capital base or their corporate governance even after getting a huge amount of government money in a regular basis. According to data available, the government has so far injected a total of Tk 20,584 crore into the State Banks in the last 17 years and the amount is Tk 1,500 crore for this year.
It's an open secret that most of the State-run Banks are engaged in financial corruption, like the private banks. Despite taking stringent measures against the corruption, Bangladesh Bank has a bad tendency to hide the actual scenario of banking sector. We must say, it will be a big blow for the government if immediate measures are not taken in this regard. Otherwise, the capital shortfall will multiply which will fell the government into a helpless situation.  
Apart from State-owned Banks, most of the country's private commercial banks are also suffering from a deficit of capital. The situation is worsening as these banks have now started dipping into their core capital.  Most of them are operating on taxpayers' money. That means, the overall condition of country's banking sector is not good at all.
We do urge the authority concerned not to waste time sitting idle when country's banking sector is falling into a black hole. Otherwise, there will be no alternative but to stopping these banks from operating. Such a situation would not be very healthy for the economy.

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