Let PCBs boost industries and agriculture

Many people became neo-rich in absence of accountability failure of BB to monitor and control their affairs of banking operation. The powerful borrowers accumulated lot of wealth plundered from defaulted portfolio and the word "ODpoti" meaning rich by borrowing became popular to imply them. This is because they borrowed in large amounts of tens of millions for business and industries taking advantage of the loopholes or absence of credit control measures of BB. Also they made fortunes out of overinvoicing of prices for imported machines for industries, overvaluing lands mortgaged to banks etc, all in connivance of crooked bankers who in fact advised these borrowers. These get-rich-quick culture soon contaminated our society. As new and subsequent governments came to power new banks continued to come up during 1991 to 1996, 1996 to 2001 and thereafter and even now hearsay prevails that more new banks are expected soon.

These PCBs are obviously performing high on profit for the shareholders. These banks were fostered by and came out on political backing just like new private TV channels are reportedly mostly fostered by political leaders of power regimes. The did not have to show business career to substantiate their capability.

The motive of these banks are only profit. But most of them are in win-win situation. They offer their funds to trading avenues which is indeed transforming our economy into an import based nation. With more and more import over the years the gap between export earning and import financing is getting wider. The balance of payment has been gradually getting worse over the years. These banks had little to offer for agriculture and industries.

This is because there is no mandatory terms on those banks for financing industries, agriculture and service sector enterprises. Neither these banks have any rural banking network nor are they required to finance SMEs, rural development enterprises etc. Even in financing industries these banks take resort to hobnobbing and eventually the efforts to get finance by new industrial entrepreneur do not see the sunlight. These PCBs only go for trade financing to reap quick profit and does not have any commitment for meeting national goals and corporate social responsibilities. If these banks could be brought under compelling finances for agriculture, industries and service sectors, development thinkers opine that, value addition to our economy could be augmented at a faster pace. As a matter of fact, PCBs are currency under tightrope monitoring by BB and value additions could be easier than before.

The profit motive of PCBs is paying some benefit to shareholders, employees, government in the mode of taxes. But this is not adding momentum to long-term sustainable development. On the contrary, huge outlay of their deposits are put in import trade to intensify propensity to consumerism. This leads to a vanity of consuming more even by the low-income citizens and in the process adds momentum to corruption. The demonstration effect brings in new avenues for consumption available at our doorsteps. The chain effects of increasing propensity to consume aggravates corruption to acquire new funds to buy more demand for import etc. Resultantly foreign currency (FC) for imports falls short and all these have contributed to the overvalue of dollar, wrongly termed by many as dollar crisis and undervalue of Taka. The reform prescription in the name of high foreign currency reserve requirements has successfully perplexed the boatman of the economy to a misconception, which is deferring or slowing down our sustainable growth on a prolonged basis.

It is high time for our economy that the PCBs are brought to book of rules. They must be asked to mandatorily have quota for financing industrial growth, agricultural promotion and service sector improvement. They should be allowed to spend not more than 30 per cent of funds for imports. These quantum may vary based on their export sector financing performance and the efficacy in financing the above core sector enterprises. All the way industry and agriculture should get top priority. Let us try to groom our national development and long term investments for sustainability. This will foster employment in the sectors of funding. Also the private sector will grow faster. The income tax rate may also be related to the banks' treatment and finance of the core sector at large. This is because these are investment hungry sectors and will reduce import by substituting it with production lines providing a home grown strategy for development.

Masih Malik Chowdhury is senior partner, Masih Muhith Haque & Co, chartered accountants.