Suppose our banks were not saddled with Tk116,288 crore bad loans. Suppose these loans were not given to shady people with even shadier deals. Suppose there were no BASIC Bank or Farmers Bank and no Hallmark or its likes.
And suppose all this did not skew the interest rates to exorbitant levels.
We could then call the last decade quite a robust time for banks. After all these, banks have been giving support to a rebounding economy, growing at an average of 6 percent. They have been giving support to a leaping garment industry now exceeding $34 billion in terms of exports.
And think of the seven crore people who now are hooked up to banks through mobile banking systems such as bKash and Rocket and Nagad. In a way, banking has become more inclusive.
But then, the other side of the banking story is as dark as the night, casting a long shadow on the future of the sector.
Loan scams, reserve heists, unstoppable rise in soured loans, political influence governing the running of state-owned banks, issuing licences on political considerations for new banks to be set up are scars on the bright face of the banking sector.
More than Tk22,000 crore was lost due to loan scams, forcing the government to infuse around Tk20,000 crore to reduce capital deficit of the state-owned banks that fell sick following the loan scams.
The loan scams made the healthiest among the banks, Basic Bank, so sick that it cannot pay salaries to its employees on time. And yet the kingpins behind the scams have not been punished.
For instance, Sheikh Abdul Hye Bachchu, former chairman of Basic Bank, was allegedly the main culprit behind the bank's loan scams.
"Bachchu could not be punished because of a strong culture of impunity," former finance minister AMA Muhith acknowledged in a recent interview with The Business Standard.
Farmers Bank, a private bank set up on political considerations, collapsed due to the same vice. The government resuscitated it by infusing fresh funds into it and giving it a new name.
Muhith, who was in charge of the Ministry of Finance for ten consecutive years, now regrets his decision to give a new lifeline to Farmers Bank.
"I realise that it was not the right decision to save Farmers Bank," Muhith told this newspaper. "I should not have allowed it to live. I should have allowed it to die."
The heist of $81 million from the central bank's account at the New York Federal Reserve in February 2016 was the most discussed issue even in the global financial market.
The largest cyber heist made it clear how vulnerable the IT system of the country's banking sector is.
Unfortunately, people engaged in the plundering of the banks have remained beyond the pale of justice.
This gave the wrong signal to people, leading to an erosion of popular confidence in the banking sector.
The rise in default loans is another scar. The amount of soured loans was Tk22,000 crore at the beginning of the 2010s. But it stood at more than Tk1 lakh crore at the end of the decade, weighing down on the banks as a huge burden.
Defaulted loans stood at 12 percent in September this year, while in India it was 11.2 percent, in Pakistan 8.8 percent and in Sri Lanka 3.4 percent.
The state-run banks are the biggest victims of the vice. Private banks are not free of the curse either.
The government's announcement on the formation of a bank review commission to bring about reforms in the ailing sector is yet to see the light of day.
Moreover, the latest loan rescheduling policy has triggered controversy as it has been blamed for favouring the loan defaulters. Economists and experts have been arguing that this will not have any sustainable good impact on the banking sector.
Poor governance has thus become visible in the banking sector. The central bank, assigned with a mandate to ensure good governance in the sector, was unable to perform a strong role as its autonomy was compromised by the government's interference.
A number of amendments to the BankCompany Act have weakened governance in the financial sector in the last decade.
As an instance, the government amended the act in 2013, barring more than two members of a family from being on a bank's board in order to avoid unethical collusion in a sanctioning of loans or in any other decision-making process. However, this provision was relaxed last year by a second amendment, allowing up to four family members to sit on the board.
The tenure of directors has also been increased to nine years from six years. The amendment predictably drew criticism from various quarters on the ground that it will encourage family grip over a bank.
The development of a sound banking sector is important for the sustainable development of an economy. But the current health of our banking sector does not match the country's growing economy.
Condition of Non-Bank Financial Institutions (NBFIs) sector
The crisis in the NBFIs is worse than in the banking sector with governance having seriously deteriorated in the last 10 years, causing the collapse of two institutions --- People's Leasing and Financial Services Limited, and Bangladesh Industrial Finance Company Limited.
The government has already declared the liquidation of People's Leasing and a decision on the other is pending with the Ministry of Finance.
Currently, 34 NBFIs are in operation. Of them, only four are in the green zone.
How industry experts evaluate last decade
Although service quality improved, thanks to the adoption of new technologies, there were disasters in governance in the banking sector in the last 10 years, said Ahsan H Mansur, executive director of the Policy Research Institute.
"A substantial degree of deterioration in governance is already visible in default loans, management inefficiency and other profitability indicators," he said.
Mansur said return on equity was above 21 percent in 2010, which has come down to four percent at present.
According to him, the deterioration in the banking sector started at the beginning of 2009 but impacted financial indicators in 2011-12.
"Improvement in service quality driven by technology is the success of the banking sector, but regulatory failure is dangerous," he said.
Mansur opined that the contributions of the banking sector to economic growth will go on getting weaker if good governance cannot be brought back.
"The banking service was widely spread out across the country in the last decade but the interest of banks' shareholders was highly ignored," said Khondkar Ibrahim Khaled, former deputy governor of the Bangladesh Bank.
"A bank is run by public money but all the policies the government took during the last 10 years, including amendments to the Bank Company Act and relaxing loan rescheduling, were of benefit to bank directors instead of a safeguarding of public money," he explained.
"The finance minister has claimed that our default loan situation is better than India's. But why do we not go for comparisons with good examples, like those of Nepal and Malaysia?" questioned Khaled.
India has already started to feel the pinch of default loans, with its growth seeing a drastic fall in recent times.
"Despite high default loans, Bangladesh still has high growth due to a good inflow of remittance," said Khaled.
He complained, "The government is not looking to the public interest. Rather, it is working for large industrialists and rich people."