More than Tk 92,261 crore has been siphoned off from the country’s banking sector through various scams over the past 15 years from 2008 to 2023, according to the Centre for Policy Dialogue (CPD).

The independent think-tank disclosed the information in a media briefing titled 'Economy of Bangladesh 2023-24: Ongoing Crisis and Actions' at its Dhanmondi office in Dhaka on Saturday morning.

The funds were plundered through 24 scams in the banking sector from 2008 to 2023, said CPD Executive Director Fahmida Khatun.

Fahmida noted that during the last several years, the banking sector has encountered several irregularities perpetrated by numerous business conglomerates and individuals, resulting in the misappropriation of substantial sums of money from several banks, amounting to thousands of crores of taka.

“CPD has compiled published news reports of 24 major irregularities in the banking sector from 2008 to 2023, which add up to an astronomically large amount of more than BDT 922.61 billion or more than BDT 92,261crore,” she added.

According to the CPD, the decision and disbursement of a significant number of loans are made under the guidance and directives of higher authorities within the bank.

Unfortunately, it has been observed that small borrowers have been subjected to legal consequences, including imprisonment, in instances where they fail to fulfil their financial obligations. However, large defaulters continue to remain unscathed, it observed.

The current state of the banking industry is precarious as it is plagued by fraudulent activities and irregularities. The incidents indicate a notable lack of proactive measures by the authorities to address the issue and establish a sense of order within the sector.

Fahmida Khatun briefed the media about the prevailing economic crises and probable ways out, while distinguished fellow Mustafizur Rahman, research director Khondaker Golam Moazzem, and senior research fellow Towfiqul Islam responded to the media queries.

MSH

Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."