Time for free refill

In the seventies, a decent meal from roadside restaurants and cafes of rice,meat/fish and daal, usually had a nice freebie added. Daal refill was free. Such arrangements are impossible to think of today, anywhere, though the United States is famous for free refills of soft drinks. But if the first part of a notice prominently displayed in the front window of a light-fittings shop in Dhaka, 'Impossible is a word. We don't' believe it. Look at your front', is to be measured neutrally, Bangladesh can definitely pull of the impossible.

Hot on the heels of a burgeoning rise in both classified and unclassified loans, a steady stream of banks are asking the authorities concerned - the miniostry of finance or Bangladesh Bank (BB) for making up a capital shortfall of some Taka 260 billion (26,000 crore). Obviously, this is a combination of the rise in minimum capital mandatory to be maintained and money to be disbursed as loans. The banks have, as the media reports, told the BB Governor that much of the shortfall is due to loans they were forced to give out under 'political considerations'. What the Governor's response was isn't known. What is know is that other banks have been instructed to loan out money to these banks. If that sounds complicated it is.

As it is external funds are becoming harder to channel inwards. A rethink of development funding has meant a review by most agencies of their activity portfolio and that has sent banks and leasing companies on a renewed and aggressive drive to find more money from the public domain. The climate change alleviation funds aren't available because they had been deposited with Farmers' Bank that now needs Tk 10 billion (1000 crore) to prop it up. Farmers is in such a state whereby it can't pay its depositors.

The larger issue is inaction or inability to recover the bad debts from whatever collateral was put up. One of the largest conglomerates, stuck in steep debt was able to get a restraining order and bar the efforts of one bank that sought to have the conglomerate's office building taken over. Of greater import is concern over management to have to cave in to such 'political consideration' and what steps are going to be taken to prevent such recurrences? Sadly enough the answers have got mixed up in the wrangle over whether or not the economy is doing well. A liquidity crisis is good in a way, though that there is a crisis at all is strongly denied by the BB Governor. It suggests there's appetite for business and demand for credit. Consumer credit continues to grow and companies are investing in email and social media to provide special deals related to short holidays, air travel, clothing and accessories and the such.

All well and good. However, neither the government nor the development partners like such investments in 'unproductive' endeavours, even though these endeavours have made domestic air travel soar, allowed affiliated businesses to grow and made airlines more viable. Moreover these are 'safe loans' against rather high interest rates tempered by small volume. On the contrary, loans given out on 'consideration' of any sort, are likely to turn bad. For those involved it might not be 'daal', but looks suspiciously like a free refill.

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