The recent statement by the Bangladesh Bank that everything is fine with the banking sector and depositor’s money is safe has caused both mirth and irritation. Basically, this anxiety is created by both formal and informal media systems that regularly report on the ill health of the banking system. Given the mess the financial sector is in, the central bank doesn’t come out as more reliable than these sources.
Dhaka Tribune reports, “The Bangladesh Bank today said that the deposits of common people in banks are completely safe. The central bank said this on Sunday in response to propaganda on various social media stating that the commoners are withdrawing their deposits from the banks. This is not correct and is being made out of conspiracy, according to a press release.”
Read: Banks have Tk 1.69 lakh crore excess liquidity: Bangladesh Bank
How BB was so sure it’s a conspiracy we are not sure but the public is very nervous and Bangladesh Bank had better accept that reality. In the last few months, the economy has not performed in exactly a stellar manner. There are several reasons including the dire global situation as all know and are regularly told. What they don’t mention are the internal problems that haunt the financial sector including corruption and incompetence.
Dollar drama
Not many own dollars but it’s the biggest question today. National economy is now being measured according to dollar reserves and rates. But “something is rotten in the state of Denmark” as Hamlet said is now the main anxiety. And like it or not it’s BB’s responsibility to supervise and steer the ship through the foreign exchange sea. As media reports, (New Age) , as many as 20 banks are unable to make payment of import LCs including state owned banks. The source quoted in Bangladesh Bank itself.
The reasons are allegedly ‘poor remittance’ and import earnings. Meanwhile the forex interbank market has become dysfunctional. As a result, some foreign banks have started to limit credit lines for Bangladesh. Bangladeshi banks have reportedly failed to pay Standard Chartered Bank, Mashreq Bank, Abu Dhabi Commercial Bank, Commerz Bank, and Axis Bank.
Interestingly, Islami Bank which channels about 30% of foreign earnings also failed to make payment to foreign banks. Why , we have not been told. State-owned Sonali Bank, Agrani Bank, Janata Bank and Rupali Bank are the other names. These banks have sought the intervention of the central bank which has been refused. LC opening has declined by about 40 % according to the report.
Meanwhile, default loans continue to rise and grow as corny capitalism finds banks as their best friend.
So why do we need the central bank if it can’t do its job?
So when Bangladesh Bank says, public money is safe, one has difficulties believing it. The banking sector resembles not the proverbial Wild West but the Cox’s Bazar scenario where the border between law and disorder is not always clear. It is supposed to monitor the banking and non-banking finance sectors but the central bank would not pass that exam. The failure of the shuttered banks like Basic, Farmers etc and sick banks like National and a host of NBFIs are good examples of inadequate supervision.
The reason why the dollar market faces a crisis is also because Bangladesh Bank took no steps to prevent the acts which led many banks and attendant outfits to commit irregularities. It developed no guidelines and never implemented any.
Read: Money changers can keep Tk 50 lakh max: Bangladesh Bank
Bangladesh Bank may argue that they are overridden by the Finance Ministry or other political agencies but the point is, those working for it have also made a choice of being there. It can’t serve as an excuse. I too have made choices to work for an outfit and accepted the editorial policy of the House. When it became too much, I left.
But it also means that Bangladesh Bank, due to its own performance record, as a guardian, is not in a position to reassure depositors. It has not been able to prevent any crime. It’s visible only when they are committed. Depositors’ money may be safe but that’s not due to what Bangladesh Bank says or did.
Source: United News of Bangladesh