MONTHLY BANGLADESH ECONOMIC UPDATE, MARCH, 2016
The current issue of the Bangladesh Economic Update reveals the institutional fragilities of the country’s central bank against the backdrop of low effectiveness of monetary policies and poor risk management, driven by lax oversight and captured governance, resulting in scams, declining growth in disbursement of credit to private sector, rising non-performing loans, and excess liquidity. Noting the linkage between expansion of credit and growth in investment, the Unnayan Onneshan cautions that sluggish rate of growth in private sector credit will further drag down investment and consequently slide down the expansion of the gross domestic product (GDP). Pointing to the increased non-performing loans and low returns on asset and equity, the think-tank observes that the sector is inundated with severe structural rigidities resulting in the disappointment of risk management in the sector. The Unnayan Onneshan recommends improvement in supervision and regulatory capacity of the central bank and streamlining of enforcement of prudential guidelines in order to check the incidences of scams and fraudulence and thus to ensure efficacy of risk management in the banking system.