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Bail out the loan defaulters is not working because of corruption cases

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17th-Jan-2020       
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THE Financial Institutions Division of the Finance Ministry would make an appeal to the Bangladesh Bank for extending the loan rescheduling opportunities at two per cent down payment to defaulters who filed writ petitions and are facing cases of the Anti-Corruption Commission. The decision was taken by the FID after the heads of state-owned commercial banks requested it at a meeting on January 9. It is believed that the step would help to reduce the burden of bad loans. The government made the much-talked-about loan scheduling facility effective since May 2019 and it is due to expire in February. We think providing relaxed loan restructuring facility to errant borrowers who filed writ petitions for not declaring them defaulters would increase the burden of bad loans. In this regard, the FID should encourage the state-owned commercial banks and the errant borrowers to settle issues through alternative dispute resolution system. The politically biased policymakers are in favour of providing the special loan to the errant borrowers and the loan swindlers to get loyality and unconditional support from them.
Meanwhile, Tk 12,394.43 crore in defaulted loans had been restructured allowing the defaulters to repay the outstanding loans in 10 years after making two per cent down payment with one year's grace period. The loan defaulters also will get privilege of 'one-time exit' along with enjoying interest waiver. Data compiled by the FID shows that the loan defaulters filed 10,551 appeals including 4,380 cases to avail the 'one-time exit' opportunity of the special loan restructuring scheme. They filed 2,880 cases against the Sonali Bank, the highest number for any bank to restructure defaulted loans to the tune of Tk 3134.5 crore. International credit rating agency Moody's Investors Service said persistent weakness in asset quality will result in poor corporate governance, weak laws and regulations that ultimately create 'negative outlook for the Bangladesh banking system'.
The banks are collapsing for stealing banks' money freely by politically powerful ones. Then there is no supervision over the bank management.  A man, Prasanta Kumar Halder, cunningly managed to take away about Tk 3500 crore from four sick financial institutions due to improper management and lack of supervision of authorities concerned.  It is safe and easy to all the thieves to flee away with people's money when robbery of money from different banks including the central bank of Bangladesh is going on rampant getting patronisation from ruling high-ups. What we know about the scheme not working is because most of the loan defaulters are facing corruption cases and cannot get bail to make the arrangement work.


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