It has become almost customary over the years that financial scams in the country get unearthed only after the misdeeds have been committed. In the banking sector, while non-performing loans (NPLs) have for long been a perennial malady, the scams in the form of money laundering and associated malpractices, such as over and under-invoicing in import and export respectively, have taken a big toll on the entire banking sector. Indeed this has considerably stunted the efficiency and productivity of the sector.
Unearthing of major scams relating to Bismillah group, Hallmark, Crescent group and lately P. K. Haldar -- to name only a few -- reflects a shocking narrative of the country's banking sector. Given the state of things, one has reasons to believe that the mechanism of oversight and monitoring, so crucial to maintaining good governance and checking on irregularities, has done little to plug in the gaps that helped such malpractices go unchallenged. At the end of the last fiscal, the amount of NPLs in the banking sector stood at Tk 961.17 billion. Of the total, state-run Sonali, Janata, BASIC bank and private Padma Bank's NPLs amounted to Tk 354.78 billion or 37 per cent of the entire stressed loans in the banking sector, according to reports. Bankers are not hopeful about recovering a major portion of the money, and consider them swindled.
Clearly, this is lack of good governance. However, given the anti-fraud mechanism in the banking system, chances of irregularities are unlikely to happen, according to experts. Banks these days have their own customised infrastructure to ensure asset management, monitor loans, suspicious transactions, and check possible fraud and money laundering. Each commercial bank has a senior official designated as Anti-money Laundering Compliance Officer, specifically entrusted with the responsibility of keeping vigil on the most toxic activity--- money laundering, and report compliance or abnormality with the central bank. On the other hand, the central bank's financial integrity unit (BFIU) is responsible for analysing suspicious transaction reports, and information related to money laundering /financing of terrorism etc on a regular basis. It thus appears strange that the malpractices do not get flagged at the initial stage or even midway, and no whistle blown from any of these dedicated customised wings. How do they then explain their role? The Bangladesh Bank's former Governor, Salehuddin Ahmed, speaking to a local daily sometime ago, said financial irregularities are spreading like a contagious disease as no action was taken for such crimes in the past. In this context, it is pertinent to refer to the alleged stock market scam that few years ago almost ripped off the credibility of the stock exchange robbing millions of people of their very means of subsistence.
The country has had enough lessons from the scams. It is time that the monitoring mechanism already in place to check on irregularities were geared to rise to the occasion--- not for the sake of the banking industry alone but also for ensuring people's trust in the country's financial management.