HOW many more banks does the government plans to set up in the public sector and what are the real justifications behind them? The question figures prominently again following Agriculture Minister Matia Chowdhury’s disclosure that the cabinet has decided to establish a new bank this time styled “Palli Sanchay Bank” to make banking services easily accessible to rural farmers. A national English daily reported on the matter on Sunday..
Referring to the function of the new poor man’s bank, the Minister said it would essentially focus on mobilizing rural savings to make poor farmers prosperous by allowing them to accumulate funds. The Minister made the point while distributing seed, fertilizer, cash, cheque and rice of general relief to marginal farmers at her constituency at Sherpur. She tried to justify the new bank by saying rural people are getting old aged allowance, widow allowance, disable allowance and such other financial support. They are now in a position to go for saving.
But the question that many bankers and fiscal experts ask about is whether or not such banks can thrive on small rural savings and give protection to the savings of the poor in the highly charged politics of the ruling party throughout the country. They hold the view that the project appears to be wishful thinking and merely a device for the ruling party men to open new business. It has already set up an expatriate bank and an overseas employment bank. New licenses to eight commercial banks and six insurance companies were also given last year and only partymen got the licenses which overcrowded the banking sector. There is also Ansar-VDP Bank, specialized SME banks and micro-financing programmes for saving and lending run by RDB and hundreds of other NGOs throughout the country. Two specialized agricultural banks are also at work for farmers and yet why a new bank for poor farmers is needed this time is not quite clear. We know banking is an open service window to all and the question arises as to why there should be separate banks for almost each separate clientele groups and what politics is at work behind them.
We also know the Bangladesh Bank Governor has launched a programme for poor farmers that allows them to open a Tk 10 bank account throughout the country to deal with government subsidies. But there is hardly any progress in sight. He is similarly pushing a beggars’ bank account scheme this time. Who knows they may ask for a beggars’ bank next time.
There is a common perception at many quarters that the government may be pushing the Palli Sanchaya Bank at the rural level to eject the Grameen Bank from the rural micro-credit arena. We don’t know whether or not it may be a good match but what we are sure about is that a good amount of public money may be spent on the scheme and even more of its deposits may be lost to swindles like which are taking place in other government owned commercial banks. We hold the view that politics must be kept out of banking to give pace to financial institutions to decide where they have the room for business and live through competition. It should stop from making undue interventions that may only bring adverse impacts at the end.
