Defaulters and finance minister
The finance minister is reported to have declared that "whatever powerful one defaulter may be" he will catch hold of him and recover loan money. In the past we heard similar vows from his predecessors but none succeeded. The reason for all FMs' failures in the past, was not the defaulters alone, it was system of recovery, the banks' own faults and the government's faulty initiatives with absence of dynamism.
The other day, the new Governor of the Bangladesh Bank expressed some of his views on this default culture. He openly admitted that it was not the sponsors alone responsible for defaulting loan, banks and the government are also responsible in many cases.
The whole-sell blaming of the sponsors for loan defaulting is not correct. I know many were made defaulters due to banks' faulty age-old rules, bad or no after-sale services, non-payment of promised working capitals, disbursement of loans without verifying the capability of sponsors in exchange of some personal benefits of some bankers, non-checking of ability of utilisation capacity of some sponsors and many more. So, one thing is sure, not all defaulters are intentional loan takers with the ulterior motive of not paying back the loan. Also the government's policy support to the sponsors was absent in many cases. The banks delivered loans without checking financial, technical and the sponsors' individual ability etc.
When all these anomalies will come up to initiate actions against the defaulters, I know the finance minister himself will shy away as did his predecessors. Bangladesh has marched ahead due to the initiatives of private investors. Today, it is the private sector including RMG, spinning, weaving, small industries that have generated more than 80% of jobs in the country.
If all defaulters are caught, the entire work force will lose their jobs. They will bring down the government in no time.
The prime minister has vowed to make Bangladesh a digital country by 2021 and a middle-income group economy. The country's future development entirely depends on the investment from private sector.
All defaulters are not ministers, secretaries or powerful politicians, whom the FM vowed to fight to recover defaulted loans, the overwhelming majority are not that powerful and genuinely want to get rid of long outstanding loans. I am sure the government will not be able to recover loans by court cases, intimidation or arresting them, it will have to sit with the defaulters, scrutinise the reasons of default and allow them to repay in their respective comfort.
The banks will collapse if they cannot deliver their liquidity to the loaners. I hope the finance minister, instead of issuing warning signals, will sit with them to find ways to recover loans.
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