Reform initiatives and policy formulation in the banking sector should be sustainable, practical and gradual, said Abdul Hai Sarker, chairman of the Bangladesh Association of Banks (BAB).
In an interview with 抖阴精品, the BAB chairman discussed the importance of coordination between the regulator and banks, the need for stakeholder involvement in policy design, and the implications of ongoing reforms in the sector.
Abdul Hai, who is also chairman of Dhaka Bank, explained that policy formulation and implementation are complementary processes, and both must be aligned to achieve meaningful results.
According to him, the best outcomes come when policymakers and those responsible for implementation 鈥� such as banks 鈥� work together with mutual understanding.
鈥業f the regulator does not discuss with us before making a policy, it becomes difficult for us to implement it. In some cases, the outcome can be worse instead of being better,鈥� he said.
The BAB chairman, also chairman and CEO of Purbani Group, emphasised that Bangladesh Bank should consult with banks before introducing new directives to ensure the policies are realistic and compliant.
He observed that the central bank has recently taken several reform initiatives simultaneously.
While reforms are necessary, he believes they should be prioritised and introduced gradually to allow banks to adapt effectively.
鈥楽ometimes, the initiatives come all at once, which can make it hard for some banks to comply,鈥� he noted.
Abdul Hai also pointed out that the taskforces formed by the Bangladesh Bank often include individuals not directly involved in the banking sector. He suggests that it is more productive to include bankers and bank owners who have firsthand experience.
Commenting on the uneven condition of banks, the BAB chairman said that the same policy framework cannot be applied to all banks.
With 62 banks in operation 鈥� several strong, some others struggling while the rest nearly collapsed 鈥� uniform directives often end up penalising well-performing banks.
鈥楶olicies made for weaker banks affect the good ones too,鈥� he said. 鈥楶olicies and directives should be made in a sustainable and compliant manner so that good banks are not discouraged.鈥�
Abdul Hai was critical of the central bank鈥檚 approach to loan rescheduling, particularly for willful defaulters.
He said that allowing rescheduling with just a 2 per cent down payment effectively rewards bad borrowers and undermines discipline.
Decisions on rescheduling should depend on the relationship between the bank and the client, he said.
On rising non-performing loans, Abdul Hai described the situation as 鈥榬obbery in the banking sector鈥�.
He argued that the actual volume of bad loans would be far higher if rescheduled loans were included.
Many defaulters never intended to repay; they took the money to embezzle, which has weakened the entire banking sector, he said.
He also called for tighter control over the use of writ petitions, which defaulters often exploit to delay legal action.
If a borrower cannot repay, there should be consequences 鈥� auction the mortgaged assets if needed, he said.
He also criticised the legal loopholes that allow defaulters living abroad to secure stay orders or legal protection through representatives.
At the same time, Abdul Hai urged regulators not to generalise wrongdoing in the sector.
鈥楽ome directors might be involved in irregularities, but that doesn鈥檛 mean all are guilty,鈥� he said.
He believes punishing wrongdoers is essential, but honest directors and responsible bankers should not be treated like them.
Discussing the ongoing merger process of several banks, Abdul Hai said that the recovery of the merged bank could be difficult because new depositors may hesitate to keep their money, and existing ones may withdraw.
He also pointed out the possibility of job losses following the merger as the overlapping positions would be eliminated.
On governance issues, he questioned the effectiveness of mandatory independent directors, arguing that such directors may not have the same dedication like the bank owners who founded and nurtured their banks.
Independent directors often lack the same level of commitment, he said, adding that while accountability is necessary, ownership should not be sidelined.
The bank owners should be given priority, but those found guilty should face punishment, he added.
Addressing irregularities in the sector, Abdul Hai said that eradicating corruption is difficult without a change in culture and mindset.
He noted that even the best reforms fail if attitudes within banks remain unchanged.