Kazi Zahidul Hasan :
The government’s move to recapitalise public banks has evoked sharp criticism from experts who said that such move would bring nothing but to create further burden on the national exchequer unless a sound management is ensured in their overall governance.
They observed that the financial health of the state-owned banks (SoBs) has deteriorated alarmingly in the recent years as a result of poor governance associated with large scale loan scams, poor loan recovery, rising bad loans and loan disbursement under political consideration. Sources in the Finance Ministry said that the government already approved a proposal to inject Tk1,500 crore in Sonali and Basic Bank to help them enhance the lending activity and meet the capital adequacy norms.
It will also provide fresh capital to three other problem-hit state banks, Janata, Agrani and Rupali to meet their large-scale capital shortfall.
“The public banks are now gripped by poor governance, and without infusing dynamism in their governance system, no recapitalisation plan will be successful,” former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed told The New Nation on Thursday.
He said the government is going to provide fresh funds to them at a time when public banks are mired by large scale loan scams occurred with the help of board members and high officials of the banks, leading them to capital shortage.
Terming the capital infusion scheme as ‘pervasive incentive’ for the public banks, he said, “The proposed capital injection plan is unjustified when the banks’ management is engaged in robbing fund.”
So, the move of the government will not bear any fruit if it cannot protect drainage of funds from the banks.
Dr Salehuddin Ahmed further said the government must restore a sound management with deployment of honest and professional people in the public banks prior to providing fresh funds. Lending practices under the political pressure should also be stopped to protect drainage of the banks fund.
“The government in previous occasion provided funds to the public banks. But these capital buffer steps finally did not work only for corruption by the banks’ management,” he noted.
Criticising the government for taking another capital infusion scheme, former BB deputy governor Dr Ibrahim Khaled said, “It’s nothing but to unethical drainage of public money.”
“The government is pumping out public money by appointing its people in the public banks, on the other hand, is injecting fresh fund in the banks from the taxpayers money. This is a contradictory police of the government that ultimately putting burden on the national exchequer,” he said.
Referring to Basic Bank’s experience, he said, the chairman of the bank robbed fund getting support from the government and he has been provided safe exist from the bank.
When asked, he said, only a strong political will can only save the public banks from further deterioration, otherwise, they will sink soon.
Terming the capital injection programme as ‘inescapable necessity’ former adviser of a caretaker government Dr AB Mirza Azizul Islam said, public banks are in a bad shape as they are now running with inadequate capital resulted from high-level non-performing loans.
“Capital buffer is necessary to renew depositors’ confidence as well as improving their financial health. But this could not be the only tool to improve their present condition unless the government bring dynamism in their overall management system with full-hearted loan recovery drive,” he added.
Last year, the four state banks — Sonali, Janata, Agrani and Rupali — received Tk 4,100 crore from the budget, of which Sonali Bank alone got Tk 1,995 crore. As default loans increased, Sonali once again found itself with a large-scale capital shortfall.
