TDS Desk:

Money laundering is linked with defaulted loans, said Chairman of the Centre for Policy Dialogue (CPD) Professor Rehman Sobhan.

This renowned economist made the comment in a discussion titled “Bangladesh Banking Sector Crisis: Problems and Solutions”, organised by the Social Research Center last night (7 July).

“Many people take a loan of Tk50 crores and import equipment worth Tk40 crores. The remaining Tk10 crore is smuggled,” he said during his speech.

“If the loan is smuggled out of the country this way, the ability of the borrower to repay the loan also decreases,” he added.

“Many businessmen doing well with their businesses are also not repaying their loans. Meanwhile, many businesses cannot repay the loan as they are not doing well,” said Rehman Sobhan.

“Defaulters are not allowed to take part in elections. However, former finance minister Saifur Rahman made the rule easier. Loan rescheduling to participate in an election and not repaying the loan is a crime,” he added.

When more time is needed to pay back loans, the effective interest rate also decreases, said the CPD chairman, adding, “The effective rate of interest becomes lower when someone takes out a loan for 2-5 years and is paying it back after 10-15 years.

“Banks are taking deposits for the short term and lending them for the long term. This is not the right policy,” he added.