Answer Introduction: A healthy financial sector is crucial for economic growth, especially
for economies like Bangladesh because economic growth in Bangladesh must
come largely export and its enterprises must, therefore be
internationally competitive. But unfortunately due to lack of discipline
Bangladesh has a financial system in which borrowers fail to repay
their loan, foreclosure is almost unheard of and the govt has to bail
out banks. The nationalized bank pass on their losses to the govt and
receive periodic capital transfusion to keep themselves going on. Thus
commercial banks are at the heart of the problem in Bangladesh financial
sector. Major problem in financial sector:
The major problems in financial sector of Bangladesh are lack of
discipline. Furthermore the crucial problem of our financial sector may
be defined as under: --Unsound private bank:
small domestic private bank are hardly better off. They offer no serious competition to nationalized bank.
--Inadequate suppression and enforcement:
inadequate prudential regulation and weak suppression are a recipe for
banking problems. Poor enforcement capacity robs weak suppression of
what little effect it might have.
--Deficient legal framework for loan recovery:
poor prudential and regulation are suppression are made worse by an
inadequate legal framework. The banks can absorb some low level of non
performing loans if there is a strong legal framework for loan recovery
foreclosure and liquidation. Bangladesh lacks such a framework.
--Shallow capital markets:
discipline of bank are only the problem in the financial sector of
Bangladesh. Capital markets are small and don’t offer a competitive
alternative to bank borrowing. Stock market capitalization retailed to
GDP is 25 to 75 times smaller than in neighboring south Asian country. Measures for cure:
curing the financial sector will not be easy enough, financially or
politically. It needs comprehensive program both short term and long
term for making the financial sector viable and competitive. For this
following measures can be considered--
1.Tightening loan recovery and its legal framework:
the govt needs to undertake comprehensive measures for loan recovery. So govt should take the following steps
a)Amend the financial loan court act to strengthen the loan courts,
giving them the powers to execute their decrees and staffing them
adequately.
b)Increases the number of loan courts, especially in Dhaka, Chittagong and Khulna to clear the backlog of cases.
c)Strictly enforce all laws against white collar crimes.
2.Strengthening Bangladesh bank:
tighter regulation should be pleased in to avoid shocks to the health
of banking system. For this the and Bangladesh bank should:
a)Tighten regulations on bank capital and provisioning and ownership.
b)Define and penalties for insider lending
c)Ensure that Bangladesh bank autonomy legal status and organizational structure.
3.Restricting private bank:
to deal with trouble private banks, Bangladesh bank should be develop criteria for selecting banks for restricting.
4.Privatizing nationalized commercial banks:
privatizing nationalized commercial banks is required to cure the
financial system. However in privatizing the banks the govt should:
a)Appoint financial advisor with comprehensive term of reference for selling the first bank.
Develop a strategy for dealing with delinquent debt of state enterprise
in co-ordination with the privatization program for state enterprise.
5.Strengthening accounting and auditing practice:
the govt needs to require auditing practice to the doubtful sector.
6.Implementing new information technology:
Bangladesh bank’s regulatory function would be easier to manage with
computerization and real time data communication links with the
commercial banks it regulates.
7.Developing staff skills:
professionalizing the banking because will generate large long term payoffs in the form of a more efficient banking system.
8.Depending capital market:
the govt should take step to increase the ability of capital markets to
efficiently provide long term funds through debt and equity financing.
Thus the reforms include:
---- strengthening prudential regulation in the stock market and
gradually removing over restrictive and ineffective regulation on share
issuers and market makers.
---- strengthening the securities and exchange commission.
9.Restricting state owned development financing institution:
strategy for deepening the financial system must give special attention
to development financial institution, the traditional but now
ineffective source of term finance to help industry respond to the
growing economic liberalization.
10.Strengthening contractual saving institution:
the govt should examine ways of Strengthening non depository contractual
savings institution take necessary step which is really needs able. Conclusion:
above discussion has shows the financial sector of Bangladesh is not
functioning well and it needs a lot of reforms and reappraisals. For
this govt should come with crash program which must be implemented
promptly with courage and passion. Otherwise all the program and efforts
will go to astray.(Source: Business Habit,Md. Azizul Islam Shahin)
Read the following passage and answer the questions bellow:
Answer Answer: 15 days Explanation: A's 2 days work = (1/20x2) =1/10 (A+B+C)'s 1 days work = (1/20 + 1/30 + 1/60)=1/10 Work done in 3 days = (1/10 + 1/10) =1/5 Now, 1/5 work is done in 3 days ∴ entire work A does = 3x 5= 15 days