THE New Nation on Monday reported that the government is giving extension of service tenure to the incumbent managing directors (MDs) of most state-owned banks and financial institutions. Most observers in the banking sector however believe that this is going to be a wrong step when these banks are sinking from their poor management performance and any bailout scheme of those banks would in the first place demands change of the vanguards in those banks. Many tend to believe that the extension of their service may be treated as a reward for their unconditional support to the government in handling the mismanagement of those banks including bank swindling by big persons and business houses in the last several years.
MDs have patronized party leaders and lower grade employees in the Board of Directors who were then instrumental in approving fictitious loans to fake businesses. Most of those banks are now on the brink and professional bankers believe only a change of vanguards may be helpful to save those banks from a state of near bankruptcy. To impact the change, not only transfer and posting at senior posts in public sector banks are important these banks must be given autonomy to hire their own Chief Executive and run the business on corporate basis based on cost benefit calculations instead of approving loans on political considerations. The incumbent Chief Executives failed to save those banks.
The huge loan stuck up which has spilled over so far is not only destroying the banks, it is also causing liquidity crisis and forcing them to go for high margin of provisioning in terms of higher lending rate to overcome losses from bad loans. This in turn is slowing down investment to slow down private sector growth. All such bad practices are arising out of running those banks without standard banking practices and only new blood in bank management may stop the plunge. Highly skilled bankers who are professionally honest and accountable and not politically tainted can save those banks. The government must change the outlook and see to how these banks can be saved instead of saving the vested interest groups illegally thriving around the public sector banks. Present MDs are blamed for having a political nexus with the political quarters however making the banks the worst victims.
Reports said after extending service tenure of the Managing Director of Sonali Bank and Rupali Bank for one year more, extension of Agrani Bank’s MD is now in waiting for the central bank’s nod. The government seems to be extending their jobs without assessing their earlier job performance and what happened to those banks in their hands. A former governor of Bangladesh Bank is reported to have said there is no dearth of capable sand professional bankers in the country and if the government is serious to salvage the state-owned banks it is time to bring new people to their management.
