Economist Wahiduddin Mahmud, a former adviser to the interim government, has urged that even if rules are relaxed somewhat to lift the economy out of its slowdown, it must be ensured that this does not lead to looting and irregularities again. Honest and genuine entrepreneurs must be identified and supported, with adequate safeguards in place, he said.
He was speaking on Wednesday at the opening of the 11th Annual Banking Conference, a two-day event organised by the Bangladesh Institute of Bank Management (BIBM) at its own auditorium in Mirpur in the capital.
Wahiduddin Mahmud said many people are now calling for rules to be relaxed to overcome the slowdown and the liquidity crisis in the banking and industrial sectors. The current crisis was itself caused by excessive relaxation of banking rules in the past, he said. Extraordinary situations call for extraordinary steps, so even if rules are eased somewhat to get through the crisis, care must be taken that this does not create fresh opportunities for looting and irregularities.
Referring to the wrong turn taken when private banks were approved without specific regulatory policy, he said: “Since liberalisation and the setting up of private banks in the 1980s and 1990s, we have been through many debates and experiences. Today’s policymakers must remember what mistakes were made in the past and what their consequences were.”
The economist believes new policy must be drawn up by learning from the past crises of Bangladesh’s banking sector, the experience of reform and the present context. The banking sector must be rebuilt in the light of the country’s own reality and experience rather than by blindly following the advice of international bodies, he said.
The culture of the country’s banking sector was first damaged by loan defaults, he said, and then by the looting of banks, which was even more serious.
Tracing the long history of the sector’s rise and fall, Wahiduddin Mahmud said that after the reforms of the 1990s several private banks reached international standards. But after 2010, new banks were approved here and there without proper scrutiny, and the sector deteriorated again.
He said discipline cannot be restored to the banking sector through policy alone. “Discipline in banking cannot be maintained by laws or rules alone. Everyone involved in the banking, corporate and industrial sectors must have a minimum of ethics,” he said.
On the long-running crisis in state-owned banks, he said that while private banks had improved in the past, reform of state banks had failed again and again. Because of the patronage politics and political influence of successive political governments, state banks became centres for distributing favours unfairly. There is no alternative to political will to keep this financial sector, the heart of the economy, free of political influence and patronage, he said.
At the opening session, chaired by BIBM director general Dr Ezazul Islam, Policy Research Institute chairman Dr Zaidi Sattar presented the keynote paper.
Speakers at the opening included Bangladesh Bank deputy governor Dr Md Kabir Ahammad; Md Abdul Hai Sarker, chairman of the Bangladesh Association of Banks (BAB); Mashrur Arefin, chairman of the Association of Bankers Bangladesh (ABB) and managing director and CEO of City Bank PLC; and Jean Pesme, the World Bank’s country director for Bangladesh and Bhutan.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report