The Centre for Policy Dialogue on Wednesday suggested closing down the private commercial banks which are now under life support and the finance ministry’s Financial Institutions Division for the division’s ‘dubious’ role in the financial sector.
These were among the several measures recommended by CPD executive director Fahmida Khatun to accelerate reforms in the banking sector hamstrung by loan scams and the plundering of money during the Awami League regime ousted six months ago amid a mass uprising.
Releasing a report titled ‘State of the Bangladesh Economy in FY2024-25’ in the capital Dhaka, the local think-tank CPD criticised the interim government for raising value-added tax and not being able to plug loopholes in the market management amid high inflation prevailing for about three years.
Being refused by the Energy Division over getting information on 28 energy deals mostly made in the past 15 years on the pretext of protecting the country’s sovereignty, the CPD called for more transparency in providing information as well as policymaking decisions.
It also called for balanced decisions to deal with the persisting challenges left behind by the ousted AL regime regarding price hike of essentials, revenue mobilisation, employment generation and the graduation from the least developed country status.
Highlighting the importance of reforms both in the political and the economic sectors, the CPD expected that the interim government would hand over power to an elected government within the shortest possible time.
CPD distinguished fellow Mustafizur Rahman noted that without reforms in the political parties, the electoral reforms alone would not ensure the much-needed political reforms.
‘Democratisation of the political parties has to be continued,’ he said while answering a question on reform initiatives taken by the interim government.
Mustafizur also said that there should a consensus on carrying out the reforms even after the next general elections.
Famida added that the next general elections should be held between December 2025 and June 2026.
Despite queries from reporters, she, however, did not mention the names of the sick banks which, according to her, should be closed down.
It has been reported that the BB under the interim government gave Tk 22,000 crore to seven crisis-hit commercial banks, including five Shariah-based banks — Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Union Bank and Global Islami Bank — which were previously controlled by controversial S Alam Group, one of the oligarchs linked to the AL regime.
The CPD also suggested ending recapitalisation of poorly governed commercial banks with public money focusing on the state-run commercial banks, removal of dual regulation and an end to political influence by the FID by shutting it down, holding former central bank governors accountable for their misdeeds and making public of investigation report on the Bangladesh Bank heist.
Fahmida said that asset management company should be appointed to deal with non-performing loans that reached Tk 2,84,977 crore in September 2024.
The amount is nearly 17 per cent of the total outstanding loans of the country and 2.7 times higher than the combined allocation for the education and health budget in the 2023-24 financial year, she said.
Focusing on the energy sector, the CPD said that fuel prices could be cut by Tk 10 to Tk 15 a litre.
It said that state-owned Bangladesh Petroleum Corporation maintained seven layers of tax and VAT while setting the prices of fuel items which, according to the CPD, was faulty.
Supporting the revenue mobilisation needs, the CPD said that the revenue mobilisation efforts should not be guided by the International Monetary Fund recommendations.
It suggested that the National Board of Revenue give emphasis on increasing direct tax collection, cut income tax waivers, stop revenue leakages and curb corruption.
Indicating to the tax leakages, Mustafizur said that the country’s people paid more than 8.2 per cent tax of the gross domestic revenue.
He also said that calls by a section of businesspeople for deferring the LDC graduation should not be considered.
Instead, the country should speed up the preparations for a smooth graduation in November 2026, he added.