Punitive measures against perpetrators are the answer

EDITORIAL

THE Financial Institutions Division’s plan to train directors to safeguard interests of state-owned banks sounds farcical as it is unlikely to work. The division arranged the programme against the backdrop of loan scams involving at least Tk 13,000 crore in state-owned Sonali, BASIC and Janata banks under the board of directors appointed during the Awami League’s two consecutive tenures in the government. The Anti-Corruption Commission failed to prosecute even former BASIC Bank chairman Abdul Hye Bachhu although the central bank found his involvement in the approval of loans of Tk 6,000 crore to fictitious borrowers that made the once profit-making bank fail. A former central bank governor rightly noted that there would be no benefit of such a brainstorming sessions since problems of state-owned banks — such as growing non-performing loans and political intervention — were known to all. Under such circumstances, it is disturbing that the division has arranged a programme of training for bank directors. All that is needed now is the willingness of the government to punish the politically motivated directors responsible for the shabby condition of these banks.

Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank and BASIC Bank have become safe havens for rule violators as their boards illegally dictate the loan approval process and adopt malpractice and fact-tampering ignoring the regulators. As such, it is not surprising at all that most of these banks were rocked by loan scams with shady loans approved by the errant boards. According to the BFID report, borrowers defaulted on 48 per cent of the loans, 80 per cent of which is bad loan. Such a plunder of public money could take place for lack of efficiency and transparency in credit approval, credit administration and credit oversight and recovery, poor selection of borrowers, politically motivated lending and negligence in risk management. All these failures of the state-owned banks also squarely fall on the government, which sets up the bank boards, often with people of a partisan bias. The situation in these banks is so alarming that there is an urgent need to overhaul the management structure of these banks to bring their directors under a framework agreement to ensure their accountability.

Against this backdrop of scams, bad loans and fraudulent practice by the banks, the government should have thought of bringing about a change in its banking policy. Still training can be provided for directors to impart knowledge on new subjects such as cyber theft and money laundering law. But no training is needed to make them aware of their core responsibility. It is high time the government concentrated on prosecuting and punishing the responsible individuals of state-owned banks exemplarily and, thus, abstained from abetting more financial crimes.

• Courtesy: New Age/ Nov 20, 2018