'The financial sector could be at risk of collapse'
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard
THURSDAY, MAY 26, 2022
THURSDAY, MAY 26, 2022
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
'The financial sector could be at risk of collapse'

Banking

TBS Report
28 November, 2019, 09:30 pm
Last modified: 30 November, 2019, 04:25 pm

Related News

  • Default threat reaches Pakistan as political crisis deepens
  • Foreign loans: ‘If our repayment capacity doesn’t increase, we will get in trouble with the interests’
  • False declaration feared as 6,500 import bills pile up
  • Robi registers decent profit powered by 4G data leadership in first quarter
  • LafargeHolcim revenue falls due to aggregate business dispute  

'The financial sector could be at risk of collapse'

The actual size of default loan is about Tk2,50,000 crore – more than double the government claimed figure

TBS Report
28 November, 2019, 09:30 pm
Last modified: 30 November, 2019, 04:25 pm
Photo: Ahsan H Mansur
Photo: Ahsan H Mansur

"Revenue, private sector credit, exports – all the indicators are down. Then what is the source of growth?" asked Policy Research Institute of Bangladesh Executive Director Dr Ahsan H Mansur.

If the deposit rate goes down further, the financial sector will be at risk of collapse, said Mansur.

The current 8 percentages plus economic growth cannot be sustainable if the financial sector crisis is not addressed immediately, he argued.

Referring to the recent collapse of Farmers Bank and People's Leasing, Mansur said several commercial banks and non-bank financial institutions are now experiencing a serious deposit crisis and they could face the same fate as Farmers Bank and People's Leasing.

"Bangladesh Bank, policymakers and the government know the problems and solutions but they do not even 'recognise' the problems," Mansur pointed out yesterday at the Annual Banking Conference 2019 organised by the Bangladesh Institute of Bank Management (BIBM) in the capital.

The profitability of banks has gone down by more than one-third in the last 10 years, while deposit growth has dropped by 10 to 11 percent in the same period.

The capacity of banks has also shrunk significantly in recent times. Private sector credit growth has also sunk in the current fiscal year.

But it is the default loans which have more than doubled in the last 10 years. Mansur considers this development as a serious future concern for the economy of the country.

"The actual amount of default loans stands at around Tk2 lakh and 50 thousand crore, which is more than double the officially recognised figure," he claimed.

If things go on like this, the economy will suffer seriously as the export and private sector credit growth are slowing down.

Bangladesh University of Professionals' Associate Professor Jannatul Ferdous in her paper suggested to gear up venture capital to boost the growth of small and medium-sized enterprises and to facilitate the startup businesses which will fuel the country's economic growth.

However, on the first day of the conference, BIBM study showed that only 20 percent banks disbursed loans to the new businesses.

Bangladesh Bank Governor Fazle Kabir called the tendency of the banks negative for the country's economy and a barrier to becoming a developing country.

Limiting banks' credit either to sectors or corporate businesses is not a good practice, he said, explaining that the country would fall behind unless new sectors are explored for investments.

The BIBM Director Prashanta Kumar Banarjee said, if the government can properly run venture capital, it will reduce the burden of unemployment and diversify the country's export.

"When people do not get jobs, venture capital helps them do something. It will create new entrepreneurs in Bangladesh," Prashanta said.

The next industrial revolution may happen based on venture capital, Mansur said, while maintaining, "Our banks are not fit for it, the government should seriously start thinking about venture capital."

Economy / Top News

Default loans / revenue / credit

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Soaring prices changing the way rural people live
    Soaring prices changing the way rural people live
  • Photo: PID
    PM Hasina urges development partners to help implement Delta Plan
  • Photo: Rajib Dhar
    Over 30 injured as BCL men attack Chhatra Dal procession near HC

MOST VIEWED

  • Photo: Courtesy
    UCB, Bangladesh Bank sign agreement to offer credit facilities to cottage, micro and small enterprises
  • Bangladesh Bank to sit with ABB, BAFEDA Thursday
    Bangladesh Bank to sit with ABB, BAFEDA Thursday
  • Photo: Courtesy
    Shahjalal Islami Bank Securities Limited celebrated 11th anniversary
  • Photo: Courtesy
    Prime Bank launches first-ever 24X5 trade shop in Bangladesh
  • Community Bank brings e-Learning Management System, Community Help Desk for its employees
    Community Bank brings e-Learning Management System, Community Help Desk for its employees
  • Former Sonali Bank MD, 8 others jailed for loan forgery
    Former Sonali Bank MD, 8 others jailed for loan forgery

Related News

  • Default threat reaches Pakistan as political crisis deepens
  • Foreign loans: ‘If our repayment capacity doesn’t increase, we will get in trouble with the interests’
  • False declaration feared as 6,500 import bills pile up
  • Robi registers decent profit powered by 4G data leadership in first quarter
  • LafargeHolcim revenue falls due to aggregate business dispute  

Features

Illustration: TBS

Should Belayets be allowed to return to school at 55?

3h | Pursuit
Impact Hub Dhaka is designed to cater to connectivity, offering lots of communal areas where you can chat over coffee, watch a webinar as a group or even host events. Photo: Courtesy

Inside Impact Hub: The surprising benefits of working in a co-working space

4h | Pursuit
Pacific Jeans uses sustainable technology in washing and finishing, and now has the facility to wash with zero water. Photo: Courtesy

How big dreams and smart investment made Pacific Jeans a denim exporting giant 

5h | Panorama
Psycure has received various awards for their extraordinary contributions to promoting Sustainable Development Goals. Photo: Courtesy

Psycure: Meet the organisation serving the underserved university students (and beyond) with mental healthcare 

1d | Panorama

More Videos from TBS

Why is Thanda Garam's juice so popular?

Why is Thanda Garam's juice so popular?

3h | Videos
Tea tales at TSC

Tea tales at TSC

4h | Videos
What journalism students want to know

What journalism students want to know

5h | Videos
Where the people have more weapons than military

Where the people have more weapons than military

16h | Videos

Most Read

1
Tk100 for bike, Tk2,400 for bus to cross Padma Bridge
Bangladesh

Tk100 for bike, Tk2,400 for bus to cross Padma Bridge

2
Bangladesh at risk of losing ownership of Banglar Samriddhi
Bangladesh

Bangladesh at risk of losing ownership of Banglar Samriddhi

3
BSEC launches probe against Abul Khayer Hero and allies
Stocks

BSEC launches probe against Abul Khayer Hero and allies

4
Photo: Courtesy
Panorama

Misfit Technologies: A Singaporean startup rooted firmly in Bangladesh

5
Illustration: TBS
Banking

Let taka slide

6
Photo: Collected
Industry

Spanish recycled cotton producer opens new facility in Bangladesh

The Business Standard
Top
  • Home
  • Entertainment
  • Sports
  • About Us
  • Bangladesh
  • International
  • Privacy Policy
  • Comment Policy
  • Contact Us
  • Economy
  • Sitemap
  • RSS

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net

Copyright © 2022 THE BUSINESS STANDARD All rights reserved. Technical Partner: RSI Lab