Bankers don’t take care of their depositors: Salehuddin

Banks run on the money of depositors, but bankers are not concerned about them because no matter how much money depositors lose, there is no one to speak on their behalf, Salehuddin Ahmed, former governor of Bangladesh Bank, said at a webinar on Thursday.

"An ordinary depositor cannot enter the room of a bank's branch manager. But banks are paying high dividends to shareholders, doing business with a depositor's money," he said at the unveiling of the Banking Almanac.

The former central bank governor said the boards of banks are controlled by shareholders and bankers are accountable to shareholders at their annual general meetings. "So, they have no choice but to pay higher dividends to shareholders and offer lower interest rates to depositors."

In order to implement the interest rate imposed by the government, banks have reduced the interest or profit rate for depositors.

Meanwhile, idle money has increased while bank's lending has declined due to the Covid-19 pandemic. So, the interest rate for depositors has gradually come down to below 1% while inflation in the country is above 5.5%.

Under these conditions, the Bangladesh Bank has fixed the interest rate on deposits to protect depositors. The interest rate for deposits cannot be below inflation as per the guidelines of the central bank.

But bankers are opposed to the central bank's directive. At a recent meeting with the central bank, the managing directors of banks demanded a change in the decision.

Salehuddin Ahmed said, for the last few years the central bank has changed policies under pressure from various organisations and bankers. In this case, the central bank should take a firm stand, verifying the reality.

Brac Chairperson Hossain Zillur Rahman, Bangladesh Bank Directors Nazrul Huda and Jamal Uddin, and IPDC Managing Director Momin Islam, among others, spoke on the occasion.

Regarding the unveiling of the Banking Almanac, they said the book has important 2018 and 2019 information on all banks and financial institutions of the country, separately. This will make it easier for investors and policy researchers to find information.

However, the speakers did criticise banks for their poor response in publishing this important book.

Commenting on the usefulness of the book, the IPDC managing director said that under corporate governance, organisations which do not disclose all their information can be easily identified.