The country’s central bank has failed to play its role in controlling default loans in the banking sector, said Transparency International Bangladesh’s Executive Director Iftekharuzzaman on Tuesday.
The Bangladesh Bank has also become an ineffective institution with political influence changing its policies in favour of default loans that have been increasing since 2010, he said.
“Regulations and supervision of the Bangladesh Bank to control default loans are now only on papers; in reality, there is almost no regulation,” Mr Iftekharuzzaman said during a virtual press conference on “Banking Sector Supervision and Regulating Default loans: Governance challenge of Bangladesh Bank and Way of Forward.”
The TIB executive director said the sector had reached the brink of collapse due to massive irregularities and deterioration of the central bank’s control over the banking system.
TIB research director Mohammad Rafiqul Hassan presented a research paper on the topic that the press conference is held
The paper found out several reasons behind increasing default loans, including the central bank's weak regulatory framework caused by limitations of the banking sector law, lack of political will, and the pressure from influential quarters.
TIB put forward a 10-point recommendation in the webinar.
It said big changes should be made in the central bank’s directory board, both in the governor and deputy governor's position.
The TIB research paper also prescribed an initiative to form a banking commission, which has been under discussion for a long time.
