NEWS reports said Finance Minister AMA Muhith has refused to allow more autonomy to state owned commercial banks (SCBs) and criticized Bangladesh Bank’s move at the same time for demanding greater autonomy for them by strengthening its control and reducing that of the Ministry of Finance. The minister reacted to Bangladesh Bank’s plea for more control which was corroborated by similar pressure from the IMF to beef up the regulatory discipline over the SCBs. Muhith said Bangladesh Bank’s demand for more autonomy for the SCBs shows they are bigger than the government. He termed their claim that SCBs don’t enjoy adequate autonomy as utter lie. “It’s a total lie, total lie,” he said brushing aside the autonomy issue for the four SCBs and three specialized banks. The minister also rejected Bangladesh Bank’s suggestion to include the autonomy issue of SCBs in the terms of the IMF’s loan programme to Bangladesh.
As we know, the matter concerning the control of SCBs is not something new, but it appears every time after some shocking events destabilize those banks and expose their management weaknesses under the direct or indirect intervention of the government. Everybody knows that banks must operate professionally taking into view the cost-benefit aspects of its loan operations and risk factors while approving loans to businesses or individuals. But strangely enough, in Bangladesh, the government tends to handle SCBs as its own property and takes undue loans for government projects and also brings pressure on them to provide loans to parties which are politically closer to the ruling party or some of its big bosses. The government also appoints political persons as directors on the board of those banks who work to their advantage at the cost of the interest of the banks.
The Hall-Mark scam involving Sonali Bank or Bismillah Group’s loan scandal with BASIC Bank have their roots in such board members and the government watched all those big fraud cases without effectively working to identify the culprits to bring them to the dock. Some bank officials were implicated in those scams although they acted on pressure from their big bosses who had connections with powerful quarters of the government. In fact, the past caretaker government had taken an initiative to corporatize those banks to run them on a profit and loss basis but as soon as the Awami League government came to power, it stopped the move while restoring full government control on them.
The Finance Minister’s latest refusal to allow autonomy to SCBs and give more controlling power to Bangladesh Bank is thus the continuation of the traditional policy to use the bank resources to the advantage of the government and its ruling party men. But the big question remains about the transparency and accountability of funds those banks hold from the public. The government has recapitalized those banks this year with a fund of Tk 5,000 crore to beef up their shrinking capital. But the question of who had stolen the money has no answer while the government is busy compensating it. We ask the government to shrink its control on those banks and allow them to professionally run their affairs. They must have their autonomy and no intervention from the government. The Finance Minister must not be stubborn about it.
