Einstein once remarked that while the universe may have its limits, human stupidity knows no bounds. Yet, when observing the Awami era, he might have amended his statement to suggest that while human stupidity may have limits, Awami looting surpasses them entirely. Now, an additional layer of endless plundering is poised to be added to the already pillaged banking sector.
Bangladesh Bank has devised a plan to merge five financially struggling banks with five stronger counterparts, by directives from policymakers.
Bank mergers are indeed a common occurrence, but in the context of Bangladesh, this move raises questions, particularly amid the backdrop of rising global interest rates. At a time when even weaker banks could potentially be fortified through increased business activities, the decision to consolidate them raises concerns. Concentrating deposits in a smaller number of banks may provide incumbent managers with the opportunity to misuse them, rather than fostering growth and stability across the sector.
It's crucial to remember that the primary cause behind the weakness of these banks stems from a high volume of loan defaults, often influenced by those in power. These banks teeter on the brink of collapse as ruling authorities freely exploit them, flouting the law with impunity.
The pitfalls of these mergers are numerous. Firstly, even sound banks may face collapse unless they take decisive action on defaulting loans.
Secondly, such mergers serve as a mere superficial attempt to address the root issue. While policymakers may portray them as efforts to resolve the crisis, in reality, they exacerbate it. This manoeuvre offers ruling debtors another opportunity to exploit and siphon off resources, perpetuating the cycle of looting.
In the case of mergers, the influence of weak banks can indeed jeopardize the stability of stronger ones, akin to a healthy body falling ill due to a virus. There's discussion about selling the bad loans of weak banks to asset management companies, suggesting that these loans wouldn't impact the acquiring banks.
However, if asset management companies were genuinely interested in purchasing bad loans, the necessity for mergers would be questionable, as weak banks could potentially manage the process independently. So, what then is the rationale behind these mergers?
In retrospect, it becomes evident that influential debtors may exploit these mergers as a pretext for bailouts or loan waivers. They could use this opportunity to launder proceeds from past misdeeds and embark on new schemes of plunder, all while the general populace remains unaware amidst the facade of mergers.
Similar patterns have unfolded in the stock market, where billions of takas have been systematically siphoned off time and again. Shockingly, no significant actions have been taken against those responsible for these acts of robbery. Instead, they have been afforded fresh opportunities.
Once more, we are bound to witness a spectacle of unchecked plunder, leaving the populace feeling utterly powerless. In the end, this cycle of exploitation will inevitably lead the economy back to destitution.