|
The health of the financial sector is at the core of sound economic progress of a country. Finance is central to economic activities and no strong economy can be sustained with a weak financial structure. Banks are pivotal among the financial institutions of Bangladesh and there is a prospective capital market as well. The insurance companies, merchant banks and leasing bodies also play important roles as financial institutions.
The banks in Bangladesh have been generally suffering from classified loans, poor credit operations, insufficient dynamism, unionism and unproductive expenditures. A financial reforms programme was carried out in Bangladesh in phases and as its outcome most of the banks have experienced a regeneration of sorts. Bangladesh Bank's policy has been following up and pushing on with reforms of the private as well as nationalised commercial banks. Thus, most of the private commercial banks (PCB) have climbed out of the list of 'problem banks' prepared by the central bank. The affairs of the nationalised commercial banks (NCBs) are being addressed through moves for their privatisation and other measures recommended by the Bangladesh Bank. Therefore, the problems of the PCBs and NCBs have considerably decreased. But this is not to say that the banking system of the country, as a whole, has come out of the woods.
The problem banks need to be guided all the way to end their present status and get a clean bill of health. Supervision of the non-problem banks needs to be sustained with unrelenting vigilance and the pending reforms of the NCBs must be successfully completed with their privatisation, corruption cleaning and taking of hard actions against their unruly unions. The drive to recover the classified loans of the banks should be made stronger by leaving the tasks to asset management companies the creation of which should be actively encouraged for the purpose.
The potential of the insurance companies is gaining recognition and this was seen in the recent adoption of the policy to enable insurance companies to invest their funds according to their will unrestricted by the need to invest the same in government securities. The insurance sub-sector can also benefit while also helping the creation of a strong financial sector if the government takes into consideration the other positive suggestions that have been put forward by the insurance industry. The merchant banks and leasing institutions are also awaiting helpful official steps that would enable them to play out their part in establishing a financial sector of greater depth in the country.
As already stated, finance is synonymous with business growth and such growth depends on the quality of the financial sector. The quality is determined by the long-term health of financing institutions, their capacity to provide finance to businesses at reasonable or attractive rates and conditions. The innovativeness of the financial institutions to come out with newer products to quickly and effectively cater to the changing demands would also help create depth in the market. Finance Minister M Saifur Rahman was pointing to such a need of developing efficient financial institutions while speaking at the inaugural ceremony of online banking service of a local bank last Monday. The minister stressed the coming of age and acquiring of the requisite efficiency by financial institutions to meet the needs of entrepreneurs as would enhance their competitiveness.
|