Transparency International Bangladesh (TIB) feels that hasty and forced mergers are a new mask for continued impunity in the banking sector. TIB also called for the suspension of this process.
Transparency International Bangladesh (TIB) said the central bank has started walking the path of consolidation in the name of protecting weak banks in the banking sector. Which should be considered consistent with the global practice in dealing with crisis in the financial sector. But this sensitive and complex task is being rushed without adhering to internationally followed standards and norms and the Central Bank’s own declared policies. A few arbitrarily imposed bank merger announcements and discomfort for good banks in the process.
The reluctance of some weaker banks to merge has deepened fears, volatility and uncertainty in the overall banking sector, TIB said. Which has thrown the entire merger process into question before it even started. According to the agency, the proposed merger has created uncertainty over the bad debt management and accountability issues of the weak banks saddled with defaulted loans. It sidesteps the core issue of the crisis in the name of ‘immunity’ to those responsible for defaults and fraud.
The organization expressed these comments through a circular sent to the media on Tuesday (April 23).
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According to the policy, a state-owned asset management company is expected to buy the defaulted loans of the merged weak bank. As a result, another round of bailout of public money has been arranged for the defaulters. All in all, considering the high risk situation and public unrest in the banking sector, TIB feels that it is necessary to make necessary reforms in the bank consolidation policy based on the opinion of reputable independent experts in the relevant sector and in the light of international standards and experience to get the expected results.
Besides, the TIB is calling for the suspension of the implementation of the decisions already taken in the name of merger.
