Opportunism. That is what comes to mind when one hears of the move by the Bangladesh Association of Banks (BAB), an organisation of sponsors of private banks, to usher in salary cuts for their staffs.
In an extraordinary letter to all banks last, BAB urged them to cut the salaries of staffs whose monthly wage is more than Tk 40,000 by 15 per cent for the period of July 1 this year through to December 31, 2021 as well as suspend promotion, increment and incentive bonus and put a freeze on all sorts of hiring including ongoing hiring.
And BAB's rationale for this audacious recommendation? As per its observation, the interest rates on lending have been on the decline at a time when loan recovery is in negative territory.
Revenue generation from credit card and earnings from both exports and imports have also nosedived.
There were other reasons but these two seemed the most credible.
Never mind that last year banks' net profit soared 87.6 per cent year-on-year to Tk 7,580 crore.
The letter prompted a veiled notice from the central bank on June 18, implicitly urging bank chiefs not to follow through with BAB's recommendation.
In the notice, the Bangladesh Banks asked banks' chief executives to take 'all required measures' such that the bankers feel regenerated and play a proactive role in implementing the government-announced Tk 103,000 crore stimulus package for revival of the coronavirus-battered economy.
"The role of bankers and staffs to keep the wheels of the economy rolling is undeniable during this hard time of the country. It will not be possible to make a turnaround of the economy and attain the desired goal of GDP without the active participation of bankers and employees," the central bank said in the notice.
In its notice yesterday, the BB did not mention the salary cut issue but asked the bank chief executives for taking all sorts of initiatives so that bankers and employees, infused with a new life, can play the role of front liners in executing the stimulus packages.
And yet, as many as five banks have already declared the implementation of the BAB recommendations and some others are taking preparation to do so, in a move that can have a domino effect on the economy although the sector employs just 1.5 crore people.
Features of job in the banking sector are considered the benchmark in the private sector, said Zahid Hussain, former lead economist of the World Bank's Dhaka office.
If banks cut the salary of their staffs, other corporate organisations will follow the same path.
"This is not the time to cut the salary as it would badly hit other sectors," Hussain said.
If all sectors commence salary or job cuts, the economy will not get the much-needed turnaround; rather, the situation will get worse.
Demand will not pick up despite the implementation of the stimulus packages of more than Tk 1,031.17 billion, which is nearly 3.7 per cent of the country's gross domestic product, and the situation will give a big blow to the supply side.
The dwindling industrial production will face a prolonged situation if people do not improve their capacity to spend.
And given the profit trend of the country's banking sector last year, the proposal of cutting the salary for the employees of banks is not logical, Hussain said.
"The economy has been facing the ongoing meltdown since the last week of March. The sponsors of banks have taken the decision of salary cut within just the two and a half months since the inception of the crisis."
The logics are not appropriate as private banks in the country have been bagging hefty profits for years.
Besides, the sponsors of banks are ultra-rich in terms of their business profile but the BAB has not made any recommendation to scrap the honorarium of directors for their attendant in the board meetings, Hussain added.
The BAB's judgment is completely illogical as the decision of cutting salary should not be implemented for all banks at the same time, said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh.
"Manpower is the pivotal asset for every bank. And they are frontline workers to tackle the recession because of their role in implementing the stimulus packages."
BAB should restrain from taking such decision in the days ahead in the interest of the banking sector, he said.
If any bank face problems due to the ongoing crisis, both the board and the management of the lender will take a decision on the issue. The bank will have to motivate their employees before taking such a decision, he said.
"Brac Bank will not implement the BAB's recommendation as this will not bring any good for us," said Mansur, also the chairman of the lender.
Asked managing directors of Mutual Trust Bank, Dhaka Bank and Pubali Bank whether the lenders will cut salary, they said that the banks have still enough strength in tackling the situation without taking such austerity measures.
Nazrul Islam Mazumder, chairman of the BAB, did not respond to a The Daily Star request for comment.