To realise our aspiration of becoming a high-income nation, it is imperative to develop the financial sector. A significant component of this sector is the banking industry, whose advancement is crucial for economic progress and the transformation of the country into a high-income economy. Regrettably, the financial sector, upon which much of the nation's economic development depends, has been exploited by a select few individuals for their personal gain over the years.
As of November this year, the amount of non-performing loans (NPLs) in the country stood at approximately 2,84,977 crore taka. NPLs and capital flight are among the primary causes of liquidity crises in banks. Consequently, banks unable to bear the burden of these bad debts are losing public trust and are on the verge of insolvency.
To extricate the banking sector from this predicament, establishing good governance is essential. Through good governance, transparency and accountability must be ensured. Additionally, boards of directors should be formed with skilled, independent individuals free from political interference. In lending practices, loans should be granted based on thorough investigations without political influence, and efforts to recover loans must be intensified.
The central bank must regularly monitor the activities of other banks and adopt stringent policies for any violations. Reforming the banking sector is a long-term process. Successful reform requires the combined efforts of the government, central bank, bank officials, and customers. An interim government can undertake the task of overhauling the banking sector with impartiality.
Above all, by establishing the rule of law and paying special attention to the financial sector, it is possible to transform the country into a high-income nation through economic development.
The article was published on the occasion of the 15th founding anniversary of the popular Bengali daily Kaler Kantho. The writer is a student of the Department of Economics, Rajshahi University.
BDST: 1340 HRS, JAN 12, 2025
