Across the world annual reports will have glossed over the massive bailout debts that they owe. Once in a while legislators and, in Europe, the central bank will issue friendly reminders. Unfortunately there's nothing friendly about a whopping Tk 225 billion of debt that has gone bad in Bangladesh. The central bank has cajoled private and public sector banks to generate recovery or write them off and the figure quoted is a combination of bad and toxic loans - meaning unrealisable. That now, banks are taking umbrage at being the sinister side of the Brady Bunch isn't unexpected.
Their reaction followed publication by the Centre for Policy Dialogue of these figures though the bad PR the bankers' association referred to was what irked them most, apparently. The argumentation is that in an Tk 8.0 trillion loan scenario, Tk 225 billion bad debt isn't headline-grabbing news. And it is as true that Bangladesh Bank (BB) hasn't been able to recover the massive amounts that were made off with from foreign reserves. With the government tenure at an end, this is one of the inherited issues for the new government.
With all due respect Tk 225 billion of public money badly handled requires some punishment meted out somewhere. Especially, if there's no collateral to drawback on. The association describes these as 'mistakes' when public knowledge knows of it as otherwise - neatly planned and executed through pressure from owners or powerful Directors. Moreover, such level of bad debt brushed abruptly aside only encourages more of the same and a pervading impunity about crime.
Banks have complained about not finding decent borrowers. Decent borrowers complain about high rates and cost, and virtually unknown business concerns make up the leading lights of defaulters. In the meantime, matters have come to a fore where many employees are flatly told to deliver deposits and loans or start walking. Strangely enough, most of the leasing companies don't complain either way. They're finding deposits and decent companies to loan to and not going bust in the process.
Donald Trump threatened to pull subsidies from General Motors in the US when they announced axing 4000 jobs due to efficiency and automation gains. Any decent manufacturer does so. But since it goes against Mr. Trump's 'jobs' agenda, the truth was harsh. Default loan-ridden banks in Bangladesh are waiting with begging bowls for some Tk 200 billion (20,000 crore) in government bailout. They've wrested control of government funds invested as deposits even as they move for fresh consumer deposits.
Matters have been worsened in this fiscal quarter with money's being transferred to election spending rather than in business. Businesses are playing the wait and see game, many have halted putting funds into projects and that further exacerbated the non-loan taking culture. Banks and anonymous-banking financial institutions are reluctant to let go of fixed deposits and all this is amply reflected by the National Board of Revenue's (NBR) collection figures dropping to one third of its target. To an extent that's a surprise given that some of election splurge is in detectible form such as printing presses and vehicle purchase. There were tonnes of posters printed before the Election Commission demarcated 'black and white' regime came into play so there was taxable moneys spent. If these were unreported, the VAT-man must have been asleep. Everyone else knows as much.
Exports have done better than expected so there were revenues to be collected. Let's hope it isn't another case of under-reporting as opposed to the famous 'over-reporting' of revenue that never made it to the government coffers.
