Defeating default
LOAN default has, of late, assumed an alarming proportion -- alarming because it has touched the roots of the national economy, in as much as the finances of the aggrieved banks and financial institutions (FIs) are in disarray, and have crushed them. The result is that a huge amount of liquid fund has been stuck for a long time, which has had a three-pronged adverse affect:
-A sizeable amount remains out of circulation, resulting in stagnation, which prevents formation of capital.
-The absence of capital formation prevents industries from moving forward at the expected speed, which affects production.
-It affects banks and FIs because borrowers who are regular in repayment are forced to accept loan only to keep their production going, of course, at higher cost. Once the production cost is high, consumer supply cost is bound to be high. The scenario becomes all the more vulnerable when vested interest gets involved in it.
Now that a sizeable percentage of the loan portfolios of banks, and FIs have already been classified under different categories and its average trend is increasing in every quarter, good sense must prevail among all so that the nation may get out of the morass.
The default culture, in fact, is a recent phenomenon. It was not long ago that people were, by and large, very much credit-conscious. They tried to manage their business pursuits and financial needs from their own sources as far as possible. They used to work hard, aiming at minimum profit, and considered a "bank loan" as a great menace.
Ideally, their conviction was to die a peaceful death, having no loan unadjusted. The intense desire to live a clean life, without having to repay any loans, however big or small, kept them in a heaven in this world.
But alas! This sense of values has gradually eroded in such a proportion that no one feels ashamed of being considered as a loan defaulter. Incidentally, it is true that the business horizon has widened and business scope has grown. To cope with the robust economic needs there emerged a phenomenal change, which needs to be addressed suitably. A "beyond proportions" scenario developed, which eventually gave rise to financial indiscipline.
This sense of financial indiscipline, coupled with the desire to become the biggest and the best, started the financial storm which swept away the norms, values, and convictions that had been so carefully upheld by the older generation. Yes, in doing quick-profit business a great amount of risk and uncertainly is involved. It is like a gamble. Once it works out it bring a fortune.
Now a big question is: will a good businessman go for a gamble or will he go for sustainable growth in his trade so that business edifice is built gradually after having consolidated its position at every stage of development?
Another factor that needs to be kept in mind is that bad days may befall any business house. Efforts have, therefore, to be made to get out of that, but under no circumstances must things be twisted in such a manner that it is tantamount to fooling people.
Bankers have to ensure that in rescheduled the existing classified loans all the conditions set by the central bank must be meticulously complied with and that the rescheduled loans must not turn into classified during the next quarter, for which strict monitoring has to be exercised.
Let us all hope and pray that some of the "old habits" of the trade circle will also be changed towards achieving our dreamland -- Sonar Bangla.
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