Bangladesh Bank’s ‘deterioration’ has been agreed upon by the former governor Dr. Mohammad Farasuddin. He said, it hurts when I hear about the decline of the central bank. Many officers are quitting their jobs. Irregularity is happening, but you cannot take role in the irregularity.
The former governor of the central bank said these things at the ‘Conversation with ERF’ event organized by the Economic Reporters Forum of the capital on Thursday (May 2).
He said, debt defaulters, tax defaulters and money laundering are similar. Due to the rescheduling of loans, the bank has suffered a financial squeeze. Because of this, the central bank has to supply money by printing money through treasury bonds. As a result inflation is not coming down. The defaulted debt is not being recovered with strong hands. A banking reform commission is needed to explain the issues to the policy makers.
Dr. Farasuddin said, everyone is enjoying the benefits of freedom. Some very much, some very little.
In response to a question, he said, I agree that Bangladesh Bank has deteriorated compared to before. But it hurts when I hear about the decline of the central bank.
Regarding money laundering, the former governor said, why is the government silent about money laundering? The publication of their list is discussed in Parliament, but not published. Along with the government, the International Monetary Fund (IMF) is silent on trafficking. It is very harmful for the country. The debtor said, if the defaulters become too big, then the problem gets bigger. Farmers have to go to jail if they default on an agricultural loan of just 10,000 rupees. But if 10,000 crores of rupees are defaulted, he is saluted, seated next to him and having tea, this cannot happen. Debts must be recovered by taking action against defaulters.
Regarding price inflation, Farasuddin said some unscrupulous food officials and mill owners are cheating. As a result, the price of food in the country has increased. Therefore, the government is unable to reduce food inflation even if it wants to.
In this regard, the former banker advised to bring relief to the country by increasing the government’s warehouse stock and taking some special measures.
He said that the disparity between the rich and the poor was there before. Now the money gap between the rich and the poor has increased more than before. Reducing inequality requires not only economic but also political action. On the advice of a donor advisor, the government decided in 1992 to disburse long-term loans with short-term deposits. This is the big problem of the bank. There are many ways to solve this problem. It is necessary to form Banking Reforms Commission to solve the overall problems of the banking sector.
The former governor said that many people expressed concern about the number of banks in the country and said – ‘The number of banks has increased.’ I don’t think so. The number of banks is not a problem, the main problem is the branches of the banks. Bank branches have become capital-centric for disbursement of deposits and loans. As the central bank authorizes banks, it also allows opening of branches. One of our bank branches serves 15 thousand people. 12,000 people are served in India and Pakistan. There may be more bank branches in proportion to the population. However, the distribution of deposits and loans should be balanced. In fact, in terms of deposit and loan disbursement, 80 percent of loans are disbursed in Motijheel, and the remaining 20 percent in Gram-Bangla.
Regarding bank merger, he said, it should be said whether bank merger is necessary or not. Mergers are in different countries. However, a bad bank cannot be made good by forcefully merging one bank with another. May be a merger or takeover. But nothing should be forced. The two banks to be merged must have their consent. Our concern is that if the bank closes, the deposit money will not be available. This is not true, it does not happen. Banks are closing in many countries, including in China. Now the money needs to come to the bank. For this, all the obstacles in the field of deposits should be removed.
