In the dynamic economic tapestry of Bangladesh, recent revelations from the Bangladesh Bank shed light on a noteworthy trend—the debt of millionaires in the country has seen a substantial surge, increasing by Tk 22 thousand 345 crores in the last three months. As the nation anticipates the 12th national parliament election on January 7, the financial activities of candidates, particularly the loans procured for election expenses, are undergoing thorough scrutiny. Despite a marginal decrease in the number of millionaire borrowers, their collective debt has witnessed a significant upswing, prompting a deeper exploration into the economic intricacies at play.
The latest report indicates that there are currently 1 lakh 38 thousand 60 millionaire borrowers in Bangladesh, collectively holding a loan amounting to 10 lakh 92 thousand 868 crores. This represents a reduction of 1 thousand 925 borrowers from the data reported three months ago in June. Paradoxically, during this period, the debt of millionaires has ballooned by Tk 22 thousand 345 crores. This situation necessitates a closer examination of the factors contributing to this apparent paradox.
With the imminent parliamentary elections, candidates are strategically navigating the financial landscape by securing loans to meet their campaign expenses. It is not uncommon for individuals, especially those in default, to rearrange payments or reschedule their debts with banks during such politically charged periods. The data suggests that the election season may act as a catalyst for the surge in loans, with individuals seeking financial support to maintain liquidity and fund campaign activities.
Nurul Amin, the former chairman of the Association of Bankers Bangladesh (ABB), points to external factors impacting the economy. A dollar crisis unfolded in the country as businesses resumed operations post-COVID-19. This crisis initially led to a decrease in loans for businessmen, but the situation has reversed, leading to an increase in corporate debts. Furthermore, the need for cash during elections is a driving force behind the surge in loans, exacerbated by an uptick in money laundering activities during election periods.
A compelling aspect of the data is the distribution disparity in bank loans, with millionaires enjoying a staggering 74.18 percent of the total loans. The remaining 25.82 percent is allocated to micro, small, and medium customers whose loan limits are below Tk 1 crore. Despite the larger number of customers in the latter category, the lion’s share of the loans benefits the millionaire borrowers.
This glaring disparity raises questions about the economic inclusivity of banking practices. Experts argue that microfinance customers, often grappling with the pressure of large loans, find themselves marginalized. In contrast, small entrepreneurs, who play a vital role in sustaining the country’s economy, find themselves with limited access to loans.
The data reveals that the number of bank depositors at the end of September 2023 is 14 crore 97 lakh 70 thousand 668 people, collectively depositing 17 lakh 13 thousand 134 crores in banks. However, the banks have disbursed loans amounting to Tk 14 lakh 73 thousand 126 crore, with only 1 crore 25 lakh 52 thousand 803 people benefiting from these loans.
This statistic underscores a stark reality: a considerable portion of the population, including marginal farmers, mutts, laborers, and shopkeepers, either does not require substantial loans or faces barriers in accessing them. Banks, it seems, are more inclined to cater to millionaires, leaving thousands of small businesses and enterprises at the mercy of their own limited resources.
A senior banker sheds light on the banking practices that contribute to this economic imbalance. Marginal farmers, mutts, laborers, and small-scale shopkeepers, who typically require smaller loans, often find it challenging to navigate the bureaucratic processes involved. Bankers, in turn, may be more willing to invest their time in dealing with larger clients, leaving smaller businesses underserved.
The prevalent practice of favoring millionaires, either due to established relationships or for the sake of commissions, further exacerbates the disparity. As a result, a significant portion of the population engaged in small-scale jobs and enterprises is left without adequate financial support.
An alarming revelation from the Bangladesh Bank data is the concentration of wealth in the hands of a select few. The number of customers who have taken loans exceeding Tk 50 crore is a mere 3 thousand 516 people. Despite their numerical insignificance, these individuals control a substantial 27.76 percent of all the money distributed by banks in the country.
This concentration of wealth raises concerns about the equitable distribution of financial resources. While a small elite enjoys a lion’s share of the available funds, thousands of small and medium enterprises struggle to secure the necessary financial backing for their operations and growth.
The current scenario of rising debt among millionaires in Bangladesh presents a multifaceted economic landscape. The intersection of election dynamics, banking practices, and wealth concentration underscores the need for a comprehensive examination of the financial ecosystem. As the nation heads towards a crucial parliamentary election, addressing the disparities in loan distribution, fostering economic inclusivity, and promoting sustainable growth for small and medium enterprises become imperative for ensuring a more equitable and resilient economic future.
