Bangladesh’s Financial Reckoning
Introduction to the Crisis
Nations emerging from prolonged misrule often find that their financial system has been severely damaged. Bangladesh is currently facing such a crisis, with non-performing loans reaching an astonishing Tk 6445.15 billion, equivalent to nearly 36 per cent of total banking credit. This is the highest default ratio in over two decades.
The Scale of Financial Plunder
The scale of financial plunder that has hit Bangladesh’s banking sector is unprecedented. State-owned banks, private banks, and even Islami Shariah-based lenders have all been affected. Borrowers with political connections took out loans worth billions of taka with no intention of repayment, treating public money as their own. Forged property documents, inflated project costs, and fictitious import-export deals were used as collateral. Regulatory approvals were given with suspicious speed, and in some cases, banks’ governing boards were captured to help approve fake loans.
Precedence for a Truth and Reconciliation Commission
There is precedence for a Truth and Reconciliation Commission in Bangladesh. In 2008, a Truth and Accountability Commission was established, which granted immunity in exchange for confession and voluntary surrender of illicit wealth. Hundreds of individuals came forward and deposited Tk 340 million into the state treasury before the High Court declared the commission unconstitutional. A new commission could build on this experience, offering wrongdoers a structured path to admit their crimes, return stolen assets, and receive limited immunity.
Challenges and Limitations
While a commission could aid in recovering some non-performing loans, time is a major constraint. With national elections and a constitutional reform referendum scheduled, there are fewer than 60 days remaining in the current government’s tenure. Establishing a credible and legally robust commission cannot be accomplished in such a short time frame. Moreover, any arrangement that appears to let major defaulters escape accountability could be seen as amnesty in disguise, further eroding public trust.
The Way Forward
The incoming elected government will be better placed to champion a Truth and Reconciliation Commission as part of comprehensive efforts to recover the banking sector and revive the economy. Such a commission could provide a structured path for wrongdoers to admit their crimes and return stolen assets. It could also be vested with strong investigative powers to document exactly how the plunder of banks occurred and which regulatory gaps must be closed.
Conclusion
In conclusion, Bangladesh’s financial reckoning is a pressing issue that requires immediate attention. A Truth and Reconciliation Commission could be a valuable tool in recovering non-performing loans and stolen funds. While there are challenges and limitations to establishing such a commission, the incoming government should consider it as part of a broader effort to restore confidence and attract investment. Ultimately, truth, transparency, and proportionate restitution can help restore the banking sector and revive the economy.
