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Write a paragraph on "Challenges for the Banking Sector of Bangladesh".
The contribution of the banking sector to the economy of Bangladesh is enormous as most of our economic sectors depend heavily on banks for their financial requirements. However, such dependence has created many problems for the banking sector and its depositors.
Commercial banks are supposed to provide small and short-term loans. Small loans can bring in many borrowers, which helps the bank construct a well-diversified portfolio.
Short-term loans increase turnover that helps increase profit. But our banks do exactly the opposite within the legal framework. For example, if a bank is permitted to grant a loan of up to 25 percent of its capital to finance power sector projects, only four such borrowers could take up all the capital of the bank. The failure of these borrowers to repay will put the bank at risk for insolvency.
Generally, a bank can grant a borrower 15 percent of its capital as funded loans and 20 percent as non-funded loans. As such, a borrower can get a loan that is up to 35 percent of the bank's capital. If there are three such borrowers, they can consume the bank's entire capital. And if they default, the bank will collapse.
In addition, by granting large loans, banks fail to construct a well diversified portfolio of investment that can show a proper balance between risks and returns. These larger loans are also concentrated in certain sectors. For example, the ready-made garment (RMG) sector gets a good portion of large bank loans.
Because of the availability of large and long-term loans, our stock market has not grown the way it should have. Borrowing funds from banks is easier than raising funds from the share market, because when funds are borrowed, borrowers are directly accountable to the banks, not to depositors. Hence, there is no pressure from depositors on the borrowers who default. But in the stock market, borrowing firms have to win over investors-the suppliers of funds with their performance in terms of share prices. Banks, on the other hand, can be easily convinced by less creditworthy borrowers.
When banks provide large and long-term loans from their short-term deposits, it imposes major risks on their stakeholders, primarily the depositors. The failure of one major borrower can put hundreds of small depositors at risk. Granting large loans to finance projects goes against the basic principle of bank lending as they create maturity mismatch issues, wherein depositors' claims to banks mature earlier than banks' claims to borrowers. This inequality also creates liquidity problems and banks fail to honour customers' cheques. Large loans are also more likely to be defaulted and decrease the opportunity for banks to make profit. Therefore, single-borrower exposure should be restructured. Large and long-term loans from banks should be restricted so that firms turn to the stock market.
The capital base of Bangladeshi banks is relatively low compared to that of banks in other Asian countries. This is partly because of our bulk of non-performing loans (NPLs)
and partly due to low reinvestment of profits. Against these NPLs, banks have to keep provisions, which come from profit. High NPLs have a direct impact on banks' profits. After keeping provision, profit is divided into two parts: dividend and retained earnings. Bank owners are more interested in taking profits as dividends rather than reinvesting them as retained earnings, even though the latter can contribute insignificantly to the formation of a capital base.
Banks in Bangladesh have also been given undue benefits with the frequent changing of loan classification rules. In order to reduce the irresistible growth of NPLs, the loan classification rule was relaxed, deviating from the international standard. In addition to loan rescheduling-term extension, interest waiver, and further borrowing-loan restructuring benefits were allowed for a group of large borrowers with loans of Tk 500 crore and above on a minimum down payment of the outstanding loans. And these borrowers did not regularise their loans after receiving such leniency. Ultimately NPLs soared, breaking all records.
To note, when NPLs rise, there are huge political repercussions. And though there is less of a fuss regarding write-off loans, a write-off loan is the worst state of NPLs. In the past, to write a loan off, it needed to remain unpaid for five years, a 100-percent provision needed to be maintained, and a case was required to be filed against the borrower. But recently, the loan write-off rule has been changed by reducing the unpaid period of an NPL from five to three years. This allows banks to erase traces of their worst loans from the balance sheet quickly. Thus, to reduce NPLs, rather than relaxing the related policies, proper steps need to be taken before and after sanctioning loans. Rescheduling and restructuring of loans must be made purely based on economic reasons. These will improve the overall condition of the banking sector.
The existence of 61 banks in the country has still failed to bring the expected number of people under the banking network. The poor are less interested in maintaining financial relationships with banks. Some private banks even discourage small depositors from opening accounts with them.
That might be the biggest challenge to overcome in this online banking era. Especially in Asian subcontinent as online banking is becoming increasingly popular thus the phishing attackers like this continent more for their fraud work as to some user of online banking the idea about using the internet for money transaction is quite new & challenging. Therefore, phishing, pharming, keylogging, man-in-the-middle, and man-in-the-browser attacks, etc. are posing a threat to those internet banking users. To exploit security gaps, fraudsters are using different methods, and they are evolving with new techniques constantly. They also possess a seasonal nature, targeting countries which have less sophisticated security infrastructure. So to prevent and deter fraud, banks must lead ahead of the curve through the regular upgrading of their safety infrastructure. Implementing security measures for online banking is easier said than done and securing an online banking channel has many other aspects to it, one of them is to address the channels individually.
Also, another key challenge which banks face is when they upgrade their security infrastructure because then they need to identify which technologies to adopt and which parts of their infrastructure to change or improve.
Therefore besides providing a robust and secure channel for online banking, banks need to decide on such solutions that not only suits their needs but also balances security, cost, and convenience for their customers.
চাকরি প্রস্তুতির জন্য ইংরেজি বিষয়ের পাঠ্যসূচি মূলত দুইটি অংশে বিভক্ত— English Grammar ও English Literature। English Grammar অংশে ইংরেজি ভাষার গঠন ও নিয়ম শেখানো হয়। এর মধ্যে রয়েছে Parts of Speech, যেমন Noun, Pronoun, Verb, Adjective, Adverb ইত্যাদি; Tense (Present, Past ও Future); Voice (Active ও Passive); Narration (Direct ও Indirect Speech); Article (A, An, The); Right Form of Verb ও Subject–Verb Agreement; Preposition; Degree of Comparison; Sentence-এর প্রকারভেদ; Transformation of Sentence; Conditional Sentence এবং Modal Verbs। এই অংশে মূলত নিয়ম জানা ও নিয়মভিত্তিক বহুনির্বাচনী প্রশ্ন অনুশীলন করা জরুরি।
অন্যদিকে ইংরেজি সাহিত্য (English Literature) বলতে মূলত ইংরেজি ভাষায় রচিত বিভিন্ন যুগের সাহিত্যকর্মকে (কবিতানাটকউপন্যাসপ্রবন্ধ) বোঝায়যার সূচনা ৮ম-১১শ শতাব্দীতে ‘বিউলফ’ (Beowulf) নামক মহাকাব্যের মাধ্যমে । জিওফ্রে চসারকে ইংরেজি সাহিত্যের জনক বলা হয় । বিভিন্ন সাহিত্য যুগের (যেমন: রেনেসাঁরোমান্টিকভিক্টোরিয়ান) মাধ্যমে এটি বিবর্তিত হয়ে বর্তমান রূপ পেয়েছে ।
আপনি আমাকে যেকোনো প্রশ্ন করতে পারেন, যেমনঃ
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