Prime Minister’s economic and planning adviser Prof Dr Rashed Al Mahmud Titumir has said the country’s market system is not being allowed to function properly like a market and that a major nexus in the financial sector had facilitated economic crimes.
“Our market is captured. The market is not being allowed to function as a market, and those who are supposed to regulate the market are actually becoming involved in this corruption. There are no price takers here; everyone is acting as a price maker,” he said.
He made the remarks as the chief guest at a book-launching ceremony titled Forensic Accounting and Fraud Investigation at Dhaka University today.
Transparency International Bangladesh (TIB) Executive Director Dr Iftekharuzzaman took part in a discussion on the book at the event. Teachers from the Department of Accounting were also present.
Titumir said the current crisis in the financial sector is not merely an academic issue but is fundamentally political.
Calling it a “political crime”, he said, “It was committed through an evil nexus at both horizontal and vertical levels. Market regulators, the government’s general regulatory agencies and the boards of directors of banks were jointly involved in this nexus.”
Describing the fragile state of the banking sector, he said attempts had previously been made to conceal the situation by artificially showing the default loan rate at 11 percent. “But forensic assessments show that the actual default loan rate is more than 35 percent,” he said.
“It has come down somewhat now. That means we can hope to see some progress going forward,” he added.
He further said around Tk 2,62,766 crore in loans had turned into distressed loans due solely to regulatory forbearance.
More than Tk 3,31,000 crore would be required to address the overall capital shortfall in the banking sector, he added.
Questioning the role of audit firms and professional bodies, Titumir said, “Those who have managed the financial sector and banks for years are responsible, but audit firms cannot evade responsibility either. The auditors and firms that certified these irregularities must be held accountable.”
He said the responsibility of chartered accountants, cost and management accountants and other statutory professional bodies is to reduce risks. “But as they failed to play their proper role, opportunities were created for financial crimes and tax evasion,” he said.
Criticizing the governance system of the past one-and-a-half decades, Titumir said, “Over the past 17 years, our institutions have been deliberately dismantled and the state machinery has been fragmented. This has resulted in the deep wounds now visible in the financial sector.”
He stressed the need for institutional reforms, ensuring transparency and accountability in professional bodies, and preventing corruption through forensic audits to overcome the current situation.