Monday | 13 January 2025 | Reg No- 06
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Monday | 13 January 2025 | Epaper

‘Banking Commission’-- a time tested decision

Published : Tuesday, 3 March, 2020 at 12:00 AM  Count : 516
Haradhan Ganguly
Haradhan Ganguly

Haradhan Ganguly

If a banking commission comes true, so far media report is concerned, it might fulfil a long standing demand of those who at least understand the necessity of dynamism and governance for financial sector as the key catalyst for balancing macro-economic fundamentals. Baking sector is now alleged to be at stake--started its down sliding from 2012 following the Hallmark scam of Sonali Bank.

Even the immediate previous Finance Minister AMA Muhith once felt it obligatory for setting up such a "Banking Commission" with a hope that it might have been pertinent to bring back banking on board. But that was shelved in oblivion.  With the passage of time things are rolling out in such a way that banking sector now falls in spiralling complexities due to lack in maintaining banking norms. So feeling necessity for a banking commission is a welcome move and time responsive one.

Experts are explaining differently. They believe, the financial domain is now confined to some people and some institutions and as a result it is weakening fast. The 'would be commission' should be empowered to release interim reports on banking sector before June next--as there are sensitive areas in the system that need to be addressed immediately. The 'would be commission' should be empowered to work independently and need conducive environment. We think time is not fully ripe to view the structure of the commission. It is still cloudy so far finance minister's last gesture is concerned.

Notwithstanding we are hopeful for protecting banking from being dysfunctional in its true sense, significance of banking commission or like any independent institutional measure should not get less priority to them at policy framing heights.

You believe it or not, as of September 2019, the amount of non-performing loan (NPL) was equivalent to about 12 per cent of the total outstanding loans in banks. Economists say the actual amount of NPLs could be double if amounts of write-offs, money stuck in Money loan court and rescheduling of special mention accounts are taken into consideration. In reality, instead of a recovery in the health of the banking sector, it is being pushed towards a crisis. About 51 per cent of the total NPLs are in the state-owned commercial banks (SBS), while 47 per cent is in the private commercial banks (PCBs).

Other indicators such as a minimum total capital adequacy ratio, returns on assets etc. are showing negative trends both in public and private commercial banks. We like to avoid munching of data to avert bore. Government's hefty dependence on bank loan out-weighs target bringing on heavy toll on private sector credit requirement. All this prove that banking sector has been in dearth of governance problem and need reform badly.  So calling for banking commission is being felt in this perspective. 

We like to bring the entire issue in the lance of youth unemployment and to see how banking commission could be blessing for and complementary to creating employment opportunity for youth by suggesting pragmatic reform agenda for banking sector to make it responsive to dynamic private sector investment. Since demographic dividend, we are enjoying, will lasts only 12 years from now, our priority is the unemployment problem, a dynamic banking sector for youth employment. Behind the silver lining of the economy, our robust growth is not seeing the creation of proportionate level of employment opportunity. This is much talked about issue among economists just.

Shouldering eight big mega projects, including Padma Multipurpose Bridge at our own cost, robust growth in remittance income helping to maintain low current account deficit, a credible foreign exchange reserve, attaining food self-sufficiency, higher per capita income and some other laudable social indices are few to cite our success story among many. At the same time, in several critical areas the performances and promises remain unfulfilled. Many old woes continue to hamper the economy, particularly a weak fiscal balance, a fragile banking sector and a shaky external sector are few to talk about.
But the issue that is turning prominence today is the question of quality of our higher economic growth that has ironically failed to create proportionate job opportunity for youth. It has reached to 12.2 per cent. Instead of reducing inequality, consumption and wealth inequality have widened also.

According to latest official survey, there are 2.7 million unemployed people in the country. The unemployment rate has been changed recently from 4.3 per cent in 2013 to 4.2 per cent last year. What is surprising is that the number of jobs rose impressively during 2002-2013 by 1.36 million per year. But it fell to only o.35 million a year since 2013, according to survey. In fact, the country failed to create adequate number of jobs despite higher economic growth in recent years, particularly since 2013.

According to the Labour Force Survey, rural areas have 1.82 million unemployed people, more than double the number of those 0.77 million in urban areas. It is noted that the country's urban-rural population ratio is 30:70. Another latest report reveals despairing findings where it is told that government will be able to create only half of the 30 million jobs it has promised in 2018 election manifesto by 2030 at the current pace of employment growth. This is a grim projection for the growing number of youths fountained from demographic dividend desperately seeking jobs.

According to the projections of the International Labour Organisation (ILO), 14.9 million jobs must be created at the existing rate of employment growth of 2.4 per cent. This means, only half of the job creation target will be achieved by 2030 unless huge investment efforts are taken. 12.2 per cent out of 20 million youths are unemployed as said before according to official statement. Of them, 7.4 million youths have no scope for education, training or involvement in employments. A big chunk of them is from marginalized groups in rural areas with no access to various facilities availed by their peers in urban areas. Lack of investment along with substandard education and skills push the marginalized groups further out of the job market.

Some social safety net programmes though playing important role in improving livelihoods of the marginalized communities are not sufficient to address the necessities they face. Even, the effectiveness of services of different public service-providing agencies which involved in education, skill development and employment for the youth lack well responsiveness.

However, private investment is the driving force of higher growth. But, lacking of employment opportunity is counter-productive. When bank money is spiralled with unproductive NPL and rescheduling breaking all norms, and if government sees banks to be the easy source of money--then fear of crunching money for private sectors is natural where investment could ensure employment.

That is why, for letting the banks to do their jobs properly, importance of a banking commission or institution like this cannot be ignored.

Writer is a freelance contributor






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