How to reduce loan scams in banking sector

World shows its beauty by keeping black and white, bad and good, low and high side by side. Although banking is very much important for economic, political, personal arena it has some dark sides for which we are often forced to feel that even banks are not safe to keep our money. These dark sides are not always because of lack of maintenance but for the scams and forgeries done by the culprits. Loan scam is so humdrum a phenomenon that even a small child playing with toys knows about it. In December 2013, the government gave Tk4,100 crores to meet capital shortfall of four banks. A year later, the state-owned banks received Tk6,000 crores from the government. There are many reasons behind loan scams. Some of them are-

1. Most of the times banks sanction loans to individuals who fawns the ugly politicians and those crafty politicians malpractise their power and influence the banks to sanction loans to their flatterers.
2. Sometimes loan scams are the sequel of the inefficiency of the individuals who are responsible to gather information about the applicants.
3. In most cases the board members of the state owned banks are appointed by the political party that rules the country for that time period. And these board members mislead various decisions and make them happen for their own welfare.
4. Sometimes huge amount of loans are sanctioned whereas the assets that are shown as a guarantee were not enough for that amount.

Now it is necessary for all of us to understand how to reduce these loan scams and save our country from huge amount of losses that it is facing each and every fiscal year because of some irregularity and conspiracy. The measures that can be taken to reduce loan scams are-

1. Before granting loans proper assessments should be made.
2. Stopping political influences in case of granting loans.
3. Eradicating nepotism and corruption while sanctioning a loan.
4. Proper monitoring of the disbursed loans.
5. Creating an atmosphere of accountability and transparency.
6. Establishing efficient management system.
7. Strengthening the power of loan granting authority.
8. Strengthening the power of Bangladesh Bank.
9. Regularize the monitoring of Bangladesh Bank.
10. Enact better laws so that laws be applied in time and laws can control citizens.
11. New and updated policies should be introduced and kept in practice.
12. Unethical competitions among the banks should be stopped and a healthy competition that does not lead them to corruption should be encouraged.
13. A central credit committee should be formed that can control the overall process.
14. Political support should also be stopped by the defaulters.

Mostly to extenuate the anguished condition government should take necessary steps, pass necessary bills and take urgent actions against those who are guilty irrespective to who they are or which political party they support.