The economic indicators are showing downward trend. Economists are saying that as a result, the New Year is starting with weak indicators.
The bank sector is so precarious that a government bank is unable to pay the salary of its staff. Bangladesh Bank sources say that revenue income has fallen along with export income and foreign reserve. In addition, import trade is collapsing, sale of savings bonds is dismal and the private sector is not getting any loans.
Banking sector is facing pressure, garments are shutting down and employment opportunities are shrinking. While people’s income is not rising, the bank interest rate has risen along with default loans.
Consequently, re-scheduling is taking place.
Director of Policy Research Institute (PRI) Ahsan Mansur says: “The condition of banks is deteriorating with solid banks facing default loans. As percentral bank, 40 banks are facing default loans with default loan standing at 40 to 85 percent for some institutes.”
BASIC Bank is in a terrible state and once deemed an ideal institute, it cannot pay its staff properly.
A letter sent to all staff says that due to loss of the last seven years, salary cannot be given as before.
Former governor of Bangladesh Bank, Ibrahim Khaled, observed: “Once BASIC Bank had governance but the institute was spoiled with the appointment of Sheikh Abdul Hye Bachchu.”
As percentral bank, loan growth has gradually fallen in the last few months. In the current fiscal year, loan growth has become 10.4 percent, which was 10.66 percent in September.
Though there is a directive that the difference between loan and deposit should be within 4 percent, the banks are not adhering to it.
Most banks are taking double digit interest rates.
Meanwhile, default loan stands at Tk 1.17 trillion which is 11.99 percent of total loan.
Hundreds of files are being sent to the central banks every day for loan rescheduling. Businessmen are either lobbying themselves or are getting influential quarters to lobby on their behalf.
In November, export income saw a plunge. Last November, export income was $3.42 billion and this year it was $3.06 billion.
As per Export Promotion Bureau (EPB) the export income in the first five months was $15.78 billion, which is 12.59 percent lower than the target.
Calling the condition dire, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Rubana Huq said that government policy support is essential in the export sector.
Garment traders are saying that crisis in the ready-made garment industry is having an adverse impact on export earnings. As per BGMEA information, from January till October last year, 60 factories closed down and 29,594 workers lost their jobs.
As per EPB, between July and November, Bangladesh earned $13.09 billion which is 13.63 percent lower than the target.
BGMEA President Rubana Huq, said: “All our orders are going to Vietnam and India and so at this moment the government needs to provide support to the industry. We want an additional Tk 5 exchange rate against the Dollar.”
Executive director of Asian Network on Economic Modeling, Professor Selim Raihan, said: “Strict guidelines have been issued for buying savings bonds; as a result, development in the banking sector is hampered.”
There is also inflation in the market and in the last one year, price of essentials has risen with onions selling at Tk 370 per kg.
Despite so much negativity, remittance flow is still positive and expatriates sending money from overseas is keeping the economy active.
In the July-November period of the current fiscal year, remittance has been $7.71 billion which is 22.66 percent more than the remittance in the same period last year.