Economists and experts hailed the Bangladesh Bank move to constitute a nine-member committee to detect the flaws in loan approval, disbursement and collection in the banking sector.
They said the committee must be formed in a transparent way and with people having in-depth knowledge and expertise in the banking sector so that the central bank can get effective and time-befitting recommendations for overall improvement of the sector.
Sources said Bangladesh Bank has started working to form the committee to find out the weakness and flaws of loan approval, distribution and collection following a court directive.
The High Court Division of the Supreme Court issued the directive on a writ petition filed by Human Rights and Peace for Bangladesh (HRPB) in which it sought an order to set up a commission to investigate embezzlement of bank money, irregularities in loan approval, interest waiver on bank loans.
Talking to Bangladesh Post, executive director and chief spokesperson of Bangladesh Bank Sirajul Islam said the process of forming a bank reform committee is underway following the court directive.
Approval has also been obtained from the government to implement the court's directive, he said, adding that a committee will be formed soon.
Highly appreciating the Bangladesh Bank move, its former deputy governor Khondkar Ibrahim Khaled said it is a good step and if the committee is formed, effective recommendations would definitely come for banking sector.
Laying emphasis on proper implementation of the recommendations which the committee will submit, he said it is the responsibility of the central bank to take whatever measures are needed for developing the banking sector, the lifeline of the country's financial activities.
Former central bank governor said Dr Salehuddin Ahmed said the central bank must take measures carefully in setting terms and conditions of the committee so that it can come up with a set of constructive recommendations for the overall benefits of the banking sector.
He suggested constitution of such committee with professionals and expert people who must be given rights to work impartially. He also suggested publication of recommendations that the committee will give on the banking sector.
The search for members to form the committee has started after the finance ministry gave its consent. Following the recommendation of the committee, Bangladesh Bank will take the next step to this end.
When contacted, chief spokesperson of Bangladesh Bank Sirajul Islam said the department concerned of the BB has been working on formation of the committee.
A BB source said one of the central bank's former deputy governors will be made the head of this committee. Economists and some current and former bankers who have skills and knowledge and are relatively honest will be incorporated in the committee.
An incumbent deputy governor will also be made a member of the committee on behalf of the central bank.
The central bank has already sent letters to the Bangladesh Institute of Development Studies (BIDS), Bangladesh Institute of Bank Management (BIBM) and the finance ministry as part of its move for selecting committee members.
"The process of forming the committee is underway . . . it will be formed soon," BB's chief spokesperson Sirajul Islam said, adding that permission has also been obtained from the government in this regard.
According to the central bank, the default loans in the banking sector was Tk 22,481 crore at the end of 2009, which increased to Tk 94,440 crore at the end of September 2020, 8.88 per cent of the total outstanding loans.
