Business group borrowed Tk 12b, BB not aware of this: AK Azad

The Bangladesh Bank does not have enough power to regulate the banking sector, a member of parliament, AK Azad has remarked.

He pointed out that a business group borrowed Tk 12 billion from a bank but the Bangladesh Bank does not know that.

Banks have a credit ceiling for single customers, said AK Azad, a former president of Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), an apex organisation of businesspersons in the country.

AK Azad said these in his speech as a special guest at a discussion titled ‘Pre-budget discussion: Expectations of the private sector’, at Hotel Intercontinental in the capital on Sunday.

The meeting was jointly organised by Dhaka Chamber of Commerce and Industry (DCCI), Bangla daily Samakal and Channel 24, a private television channel.

He mentioned though the central bank later investigated and found out about this incident, but no action was taken against anyone.

This is happening due to the weakness of the Bangladesh Bank, AK Azad remarked.

He said banks have a tendency to regularise many defaulted loans in different ways. The banking sector is now showing defaulted loans of Tk 1.45 trillion. But, according to economist Mainul Islam, defaulted loans will be around Tk 4 trillion.

Finance minister Abul Hassan Mahmood Ali attended the event as the chief guest.

Another special guest was Abul Kalam Azad, a member of the parliamentary standing committee on the finance ministry.

The guest of honour was National Board of Revenue (NBR) chairman Abu Hena Md Rahmatul Muneem, financial institutions division secretary Sheikh Mohammad Salim Ullah and Bangladesh Bank deputy governor Habibur Rahman.

DCCI president Ashraf Ahmed moderated the event that discussed four issues in view of the upcoming budget. These are income tax and VAT, financial sector, industry and commerce and infrastructure development.

Taking part in the discussion, AK Azad, also the owner of Ha-Meem Group, also spoke about the high interest rate of bank loans.

He said the investors are now paying a 14 per cent interest rate borrowing money at 9 per cent interest rate.

AK Azad feared that many people would become defaulters due to increased interest. He raised the question - who will take the responsibility of 5 per cent additional interest now? The businesspersons had no preparation for this.

The dollar crisis in the country has not been resolved, one of the top businesspersons remarked.

AK Azad said the official rate of dollar is Tk 110 but the importers are buying a dollar at a rate of Tk 124 and the customs department is also calculating duty at a rate of Tk 124 per dollar. The other government organisations are counting the exchange rate at Tk 110. They allege that traders manipulate to raise the price of dollars. 

He requested the authorities to take actions instead of blaming the traders for everything.

AK Azad also criticised the curriculum at the educational institutions. He said public money should not be spent in teaching subjects like Pali and some of the similar subjects. Terming this as a waste of tax payers' money, he said instead the focus should be on subjects like artificial intelligence.

He also mentioned that the number of jobless in the country is around 20 million. “The country is not getting skilled manpower. Some 125,000 foreigners are working in our country. They are remitting a huge amount of money from this country.”

He further said that it is not possible for the NBR alone to increase revenue collection. According to him, this requires a political will.

Abul Kalam Azad, a member of the parliamentary standing committee on the finance ministry, said that Bangladeshi investors invest in business with a lot of risk. But the foreigners do not want to take risks. They want consistency of policy on taxation. Development in the bond and insurance sector is needed to increase investment, he added.

NBR chairman Abu Hena Md Rahmatul Muneem said widening the tax net is not as easy as it is said. But tax collection is not the only objective of NBR. Already, tax rates have been reduced in various sectors. The number of individual taxpayers has increased from 2.1 million in 2020 to 3.7 million as of February this year. The number of Business Identification Number (BIN)-holding establishments that pay VAT has increased from 200,000 in 2020 to 500,000 now.

Financial institutions division secretary Sheikh Mohammad Salim Ullah said that the Bank Company Act has been amended to reduce defaulted loans. Apart from this, an initiative has been taken to form an asset management company. The initiative taken to merge some banks will be implemented through due process. The activities have started according to the roadmap for establishing good governance in the banking sector.

Speaking at the discussion, Bangladesh Bank deputy governor Habibur Rahman said, “The interest rate was not increased due to the pressure of the International Monetary Fund (IMF). It is not fair to complain about it. We’ve gradually increased. Many things related to the outside economies have a negative impact on our economy. This effect has been more in the case of inflation and defaulted loans.”

Md Habibur Rahman also said, “There is no alternative to increase the interest rate to control inflation. Other countries around the world have long adopted aggressive interest rate hikes. We have increased the interest rate very late thinking about business in this regard.”

He also criticised those who thought the “SMART” interest rate was implemented in line with the suggestion of IMF.

However, despite all the discussions held in front of the finance minister Abul Hassan Mahmood Ali, he did not say anything on any of the issues.