No long queue at bank and post office Last week was a happening week for the financial sector.Court has ordered to seize the property of a chairman of a group as well as an Islami Insurance Company. The chairman is in jail for allegedly swallowing Tk 516 crores through abuse of power,treachery and money laundering. Tk 1.5 billion worth of house is situated at the rich neighborhood of Baridhara.This is the snapshot of the anarchy going on in the financial sector.He has even been accused of taking loans in the name of employees without their consent. Meanwhile, liquidity crisis in the Islami Banks is acute.Last week ,central bank provided credit worth Tk 147.90 billion to Islami Bank,First Security Islami Bank,Union Bang,Social Islami Bank Limited and Global Islami Bank.Interest rate in this case is set at 8.75%.What is interesting banks lack bond or treasury bill to draw credit from the central bank.The special credit provided against promissory demand note,which pledges to pay back the credit at any cost. Liquidity crisis in the banks has driven inter-bank lending rate to 10%. Many banks failed to meet the cash reserve ratio due to the crisis. This is an indication how clients lost their trust on banking system as govt took a nonchalance stance on earlier irregularities. Despite slight improvement in inflationary situation,inflation is hovering around 8% as per official statistics. Amid this,Finance minister ditched the idea of a new pay-scale for inflation-battered public servants.Another pay-scale would definitely hike the price level.Meanwhile, central bank is pursuing a monetary policy aiming to tame the inflation. In addition, govt also raised the price of electricity by 5% ahead of scheduled visit of IMF DMD.The move coupled with the idea of open market determinaton of oil price at the domestic market is a deliberate one to unhook the IMF credit package. Post offices that sell savings certificates and offer attractive rates on deposits are deserted.Once they are packed like sardines.Same picture can be seen in banks. In the banks only the time deposits bear significant interest rate. But the interest rate is well below the inflation rate. And investment of more than Tk 500,000 on savings certificate requires submission of tax return.Series of banking scam further erodes people's trust on banks. Decrease in overall deposit amount last year sums up the whole story.Govt is stubborn to cap the lending rate at 9%.It is still unknown how the government will win back people's lost confidence on the banking system.
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