The banks and financial institutions of Bangladesh are going through plenty of challenges like default loans, corruption and lack of skills. The banks are beset with heterogeneous problems. Bangladesh Bank and the government have taken different policy measures to get relief from the pressure. However, the efforts have seen little outcomes.

The situations have not improved actually. If we want to move forward, the banks and non-bank financial institutions should be gone through rapid reforms fixing the current challenges.

The best practice and policy implementation depend on directors and senior management of banks. The transparency is a system backed by best practices. In this case, all should act carefully to ensure security of public savings on bank.

Most of the money come from deposit of commoners. A little portion of money comes from shareholders and other sources. We hardly find accountability in this segment.

Accountability is very important. If anyone is given responsibility in the operation, the responsibility must be fully accepted by that person. They have to do with skills, honesty and care. If anybody performs well, s/he should be promoted or given facilities to grow further. In case of deliberate mistakes or negligence, corruption, the officer should be brought to book.

In most cases, many do not acknowledge the mistake of work. Secondly, if anyone makes a mistake, s/he tries to shift responsibility to others. There is a common saying, “It was done before. I don't know,” Sometimes, the accused blames ‘low rank’ staff in many cases. All should be accountable for neglecting respective tasks.

The stories of corruption are published in the media. The banks also find these irregularities. But the issue remains unresolved. The wrongdoers get unpunished encouraging such irregularities sine die.

Sometimes, they (accused staffs) were promoted. And the honest persons remain out of focus. They often suffer from various mental agony. Honest persons feel discouraged to do noble work. This is the most important thing for banks and other institutions to be considered.

The IMF's $ 4.7 billion loan will be available in seven equal installments in every six months. It will take 42 months for full disbursement. There is a significance of IMF loan as the multilateral lender has given series of conditions for reforms in the banking sector.

The first installment from IMF has already hit Bangladesh Bank account. The IMF will review the progress in economic indicator before releasing next installment. The third and fifth conditions of IMF are related to mitigating risk factors in state-owned commercial bank and financial accountability in public enterprises.

The government should place financial statement of 50 public enterprises before IMF.  There will be income statement, balance sheet, and profit loss account. We don’t find any significant progress in in financial management of state-owned agencies. The public enterprises try to focus on different things in promotional activities.

If we look into the financial details of public enterprises, most of the entities are suffering from poor conditions. Therefore, in this article, I am stressing transparency and accountability in the financial sector. The integrity in financial institutions is important for governing a country with democratic practices.

The World Bank has been emphasising transparency and accountability since 1994 for good governance, especially since the beginning of the year. In this way, however, the IMF has been pushing for transparency and accountability in financial sectors since 1998-99. If there are no transparency and accountability in the financial system, the commoners remain at risk with their savings and businesses also feel uncertain about their future.

Bangladesh has adequate legal frameworks -- company act, bank company act -- for ensuring good governance in financial system. The problem lies with implementation only.

There is registrar of joint stock companies and firms (RJC) for initiating a company with a bunch of rules and regulations. Bangladesh Securities and Exchange Commission (BSEC) maintains some rules to enlist a company with bourse to raise public funding. When the company comes to the stock market, it has various laws, rules, various things to comply with. But it violates the rules after entering to the market.

First of all, these controlling agencies or government agencies will try to comply with those. Those stakeholders, who are supposed to follow the rules, do not take them into action. The regulatory agencies have chance to improve the environment with implementation of rules and regulations.

Bangladesh Bank issues circulars regularly to keep ‘good governance’ in financial institutions following the international standards. There is a financial reporting council to monitor the implementation. It is a good initiative ultimately.

The financial reporting council is an independent body of the government. It monitors the financial health of any organisation.. If the audit is not done properly, profit or loss is not projected properly, having negative impact on everyone.

For listed companies, doing various types of transactions in the stock market, if the reports or audits are not done properly, it proves the lack of transparency and accountability.

There are auditors, chartered accountants, management accountants for assessing financial strength of a company. The scholars have enough responsibilities. Apart from this, we follow International Financial Reporting System.

Transparency and accountability are interconnected with delivering the public services in right way. The common people have the right to get the services on time. If the services are not delivered perfectly, there is lack of accountability and transparency. What is their opinion? It is necessary.

Another issue is morality. The administrations and business community should maintain the values of morality for integrated development of the country. The hidden risks are big challenges for any economy. Sometimes, it damages all progress or development activities.

There are two aspects of accountability, one is the paper-based statement and the other is how much people are getting actual products and various services. So, accountability is needed for this. Accountability now takes many forms. One is accountability to the public which is called public accountability. Another is legal accountability. The government is accountable to the people and to the Parliament.

Again there is administrative accountability. There are people in administration who are accountable to make the decision is right or not. They are also accountable to say whether there is a mistake or lack of skill or corruption in any work. Finally, financial accountability is how one spends the money?

Now, if I put the two together; accountability and transparency; these two should be applied together in any bank and financial institution. Although the two have different concepts, both should be practiced together.

Transparency ensures accountability. Being accountable requires transparency. The two components of good governance depend each other. We should move forward with data-driven policy implementation rather than uttering development stories only.

(The writer is former governor of Bangladesh Bank. He teaches economics at Brac University)