Roundtable: Scammed loans should be separated from defaults

Experts at a roundtable have suggested that the loans that were tricked out of the banking sector using anonymous entities should be separated from the total default loans of the sector.

Such loans should be prevented. The economy will struggle to move forward if the burden of anonymous loans is passed on to others. 

Prothom Alo hosted the roundtable discussion – Economy: Challenges for new government – at its office in the capital’s Karwan Bazar area on Saturday, with economists, business leaders, and bankers as speakers.  

Ali Khokon, president of Bangladesh Textile Mills Association (BTMA), highlighted the importance of filtering out the anonymous loans from the total defaults. “Please separate bad loans from anonymous loans. Why would we, the businesspeople, bear the burden of anonymous loans? Should we bear the liabilities of Hallmark, BASIC Bank, and PK Halder? Was the Bangladesh Bank in a sleep? We should discuss the actual defaults, excluding the anonymous loans.” 

Supporting the BTMA chief’s stance, Farooq Moinuddin, former managing director of Trust Bank, said it is necessary to separate anonymous loans from default loans. 

The roundtable identified inflation as a key challenge for the new government and advised to lay emphasis on addressing the energy and power sector crises, prevention of money laundering, and increasing expatriate income and reserves. They also suggested ensuring good governance and transparency.

Ahsan H Mansur, executive director of Policy Research Institute (PRI), recommended immediate and short-term steps to restore stability in inflation and the macroeconomy. 

“Inflation should be decreased through a further hike in the interest rates. Once the interest rates are increased, it will restore stability in the exchange rate of dollars and resolve the liquidity crisis in banks. The money will return to the banks from outside. Besides, it needs to regain the trust of depositors. What are going on in the Shariah-based banks should be stopped,” he said.  

Shamsul Alam, former state minister for planning, described the target of bringing down inflation to 7.5 per cent by June as ambitious and expressed skepticism about its achievement. 

“The prevailing inflation initially came to the country with imports. Later, inflation went up due to reasons associated with increased production cost. Once the production cost rises, it cannot be slashed overnight. Hence, inflation cannot be controlled merely with the interest rates.” he said, suggesting measures to gear up commodity supply and reduce the production cost, in addition to the high interest rate. 

The former state minister also noted the shrinking security of capital and individuals in the country and said it eventually paves the way for capital flight as well as brain drain. 

Fahmida Khatun, executive director of Centre for Policy Dialogue (CPD), underscored the need for an effective fiscal policy to keep inflation in check, in addition to the monetary policy. She also suggested cost reduction in different sectors as well as in expensive projects, and improving market management.  

Syed Nasim Manzur, managing director of Apex Footwear, highlighted the multiplied cost of business, particularly expenses on supply chain, fuel, wage, and services, and expressed their inability in cost-cutting.

He also pointed out that the National Board of Revenue (NBR) is receiving 30 per cent revenue in extra thanks to the high exchange rate of dollars. He said the tax rate should be rationalised to bring down inflation and also suggested reduction of fuel cost through price-adjustment with the global market. 

Anu Muhammad, former professor of the economics department at the Jahangirnagar University, mentioned transparency, accountability, and institutional failure as the major problems behind the current economic crisis.

“Decisions are being made, policies are being formulated in the country. But there is no transparency on who is making those, how these are being done, whose interests are to be served. It resembles the country’s traffic signaling system – traffic stops when the signal remains green and runs when it is red,” he added.  

Also, he held the energy and power sector responsible for the current crises. “It was said whatever is done, it cannot be questioned, cannot be taken to the court. Besides, there cannot be any questions regarding the deals taking place.” 

Rashed Al Mahmud Titumir, a Dhaka University teacher, stressed maintaining transparency in official data and statistics, saying, “A right policy cannot be formulated if there is no transparency in data or statistics. If discussions take place, or decisions are made on the basis of fiction, it remains baseless. Disinformation and misinformation should be separated.”  He believes that structural reasons and unification of ultra-rich and policymakers led to the macroeconomic imbalance and that discussions will not gain traction unless the fact is admitted.  

Masrur Reaz, chairman of Policy Exchange, emphasised quick and effective steps to address the prevailing crises, as the government and the challenges are not new in a sense. 

He further said the political will is imperative for the steps. The authorities should contain the scopes of anonymous loans and money laundering, take initiative for unification of weak banks, ease up and improve the business environment.