Bank owners get jackpot
The owners of the private banks of the country are getting special privileges one after another capitalizing on their unexecuted assurance to reduce loan interest rate. Even they have not yet fulfilled their pledge to curb loan interest rate according to their commitment to Prime Minister Sheikh Hasina.
However, cash reserve ratio (CRR) has been already curtailed from 6.5% to 5.5% in favor of private banks' owners. Besides, 50% government deposits would be placed in private banks in terms of recent decisions.
On top of that the proposed budget by Finance Minister AMA Muhith for 2018-2019 fiscal year has slashed corporate tax by 2.5% which is another huge bounty for the owners of private banks.
Reportedly interest rate for saving bonds is being reduced under pressure from Bangladesh Association of Banks (BAB) which consists of the owners of private banks. BAB leaders have also asked for clutching the idle money from the state-owned banks.
Under these circumstances, economists have remarked that the private banks' owners have hit the jackpot through the blessings from Finance Minister AMA Muhith and Bangladesh Bank's Governor Fazle Kabir.
If corporate tax is reduced by 2.5% it would grant a monetary concession of almost 8 hundred crore taka to private banks and some other corporate giants, financial sources have informed.
Financial experts do not appreciate such disproportionately profuse advantages being given to private banks at this time. It would further instigate corruption and irregularities in the banking sector, economic scholars have stated. Analysts have said that such move would further widen class discrepancies and deepen socio-economic deprivations.
Former finance adviser to caretaker government Dr. Mirza Azizul Islam said to The Asian Age, "Reducing corporate tax is not a good sign for the banking system because it would serve no benefits to the clients. Rather the owners of the banks will get hold of more money and affluence in this way."
Bangladesh Bank's former deputy governor Khondaker Ibrahim Khaled told The Asian Age, "In all other countries depositors' betterment is the most highly valued aspect but quite the opposite thing is happening in Bangladesh. The regulatory authorities are listening to all demands from the owners of private banks. This is not the right way to deal with banking functionalities."
Ahsan H Mansur, Executive Director, Policy Research Institute (PRI), said to The Asian Age, "Private banks' owners should not have been given these special benefits so early.
The government should have asked them to first pull down loan interest rate and then some benefits would be given to them. But giving away such big rewards to private banks before loan interest rate is curbed has been a wrong decision."
Defaulted loans, capital deficit, liquidity crisis and many more perils have put the country's entire banking arena under tremendous pressure. Economists, political leaders, members of parliament and prominent citizens have heavily criticized Finance Minister AMA Muhith for the untoward things which have affected banks.Bangladesh Bank's Governor Fazle Kabir has also faced intensified resentment for his alleged failure to keep banks on the right track.
Bangladesh Bank's data shows that all state-owned, private and foreign banks have raised their loan interest rate in recent times.
Double digit loan interest rate is being charged by all the 57 commercial banks of the country reportedly. Even entrepreneurs have to bear up to 22% interest rate in case of industrial loans, relevant sources have told media.