A welcome move by the HC

The High Court's order to the governor of the Bangladesh Bank (BB), to submit a list of business entities and individuals whose loans were waived until December 31 last year, is welcome. The court also sought information on whether the same organisations and individuals were given any new loans and asked the secretaries to the ministries of finance and law and the BB governor to explain why the Bank Companies Act 1991 provision, which authorises the central bank to exempt anybody from loans, should not be declared unconstitutional.

The banking sector for long has suffered because of the issuance of questionable loans, leading to defaulted loans skyrocketing. Those responsible for approving the loans, however, were mostly not held accountable, perhaps because of the politicisation of the sector. Even the finance minister, for example, said in Parliament that some individuals responsible for approving dubious loans were, indeed, being backed by members of his own party.

Not only does the absence of accountability set bad examples, but it also creates an environment of impunity where people are increasingly encouraged to approve loans, even when chances of repayment are slim. On the flipside, defaulters too are encouraged and it is the taxpayers who are left holding the bill as the government continually provides banks with bailouts, instead of holding them accountable for failing to do their 'due diligence'.

This politicisation of the banking sector must end. And the High Court's order, seeking some form of accountability from the regulators, is a good first step towards achieving that.