Bangladesh Bank was established to control the banking sector but in recent times, all policy decisions taken by the central bank have been in favour of private commercial banks.
The rise and fall of liquidity is also being instigated on the desires of private bank owners. While the private banks disregard Bangladesh Bank’s regulations, they are taking all the advantages from the central bank.
Relevant sources say, banks now enjoy unprecedented freedom.
It’s believe that Farmer’s Bank is floundering due to excess aggressive banking. Some other private banks are also facing financial crisis as a consequence of pursuing aggressive banking.
Commenting on the issue, Selim Raihan, executive director of SANEM, a non-government research institute, says: “private banks are running according to their wishes; they are not adhering to any rules of the central bank in distributing loans.”
Due to excess loan disbursement, banks are facing cash crunch, he observed and lamented saying that now private banks keep the government central bank under pressure.
“Due to excessive influence of private banks over the central bank, regular inspection of private banks has fallen.”
Commenting on the matter, a Bangladesh Bank official told Bangla Tribune: “officials could not inspect Farmers’ Bank and the same happens for other banks also.”
Faced with pressure from private banks, the central bank could not reduce the loan-deposit equation limit. Bangladesh Bank backtracked twice after deciding to issue notice on time limit for loan-deposit equations.
On 2 July at a bankers’ meet, decision was taken that no punitive measures will be taken against private banks for a rise on loan-deposit equation.
At the same seminar, provision was made, under which, deposit in government banks can be transferred to private banks at 6 per cent interest.
In the recent budget, corporate tax has reduced for private banks along with Cash Reserve Ratio, CRR.
Pressured by private banks, CRR rate was cut by 1 per cent; as a result, banks suddenly had an additional Tk. ten thousand crore.
Talking on the issue, former adviser to the caretaker government, Dr A. B. Mirza Azizul Islam told Bangla Tribune: “private bankers will always try to take added advantage; it’s the role of Bangladesh Bank to safeguard interests of depositors.”
In the banking sector, the deposit stands at around 10 lakh crore; at banks, generally, 10 per cent of funds belongs to the entrepreneurs and the rest to depositors.