Kazi Zahidul Hasan :
Influential businessmen linked with the ruling party are showing keen interest to open new commercial banks, as it can easily use to launder public money, opined banking experts.
“Businessmen are rapidly getting interested in owning banks to loot public money. Looting money from banks has become a new trend in Bangladesh and bank directors have already involved in the crime. Bad economic governance and lack of proper financial laws are mainly responsible for the situation,” Dr Salehuddin Ahmed, former BB Governor, told The New Nation on Tuesday.
“Lured by the situation, unscrupulous businessmen are becoming more interested in owning banks and the central bank under the government pressure is going to approve new bank licenses to them,” he added.
Bangladesh Bank (BB) officials said that they had received more than 80 applications seeking permission to open private commercial banks at a time when the country’s banking sector is under severe stress because of ever-rising non-performing loans (NPLs) and loan scams.
When asked, Dr. Salehuddin Ahmed said that issuing new bank licenses would not be feasible by any means when the banking sector is already in the grip of a grave crisis with many commercial banks are on the verge of collapse.
“The central bank is entrusted with the responsibilities to regulate and mitigate the anomalies in the banking sector. It is high time for the BB to start playing the role of regulator strongly and bring the sector in the right track,” said the former BB governor.
“Businessmen are getting more interested to own banks to get easy access to fund to be flown to their businesses,” Md Yasin Ali, a Supernumerary Professor of Bangladesh Institute of Bank Management (BIBM), told The New Nation yesterday.
He added, “The soaring NPLs in banks raise the question whether they want to own banks or loot public money?”
The 57 commercial banks in the country have disbursed Tk 752,730 crore loans as of September 30. Out of the total disbursed loan, an amount of Tk 80,307 crore or 10.67 per cent) tuned into NPLs, according to latest BB data.
The banks had altogether written off Tk 45,000 crore loans sending the total NPLs at Tk 125, 307 crore, the BB said.
“A powerful quarter is seeking licences for establishing new banks even though existing ones are struggling to survive. This quarter is coming to launch new banks with ill intention since looting public money from banking system proved to be the easy way through indulging corruption,” Dr Khondkar Ibrahim Khaled, former BB deputy governor, told The New Nation.
He added, “Bank promoters with honest intentions have no reason to involve in bank business if they consider the current situation of the existing banks.”
When asked, he said, the central bank under pressure is going to issue licenses of new banks when bank directors are largely getting involved in corruption and irregularities regarding disbursement of loans.
“It would be detrimental for the banking sector as well as the economy,” he warned.
Khondkar Ibrahim Khaled said the banking sector is in crisis because corrupt businessmen have taken control of the banks’ ownership. They are exerting undue influence in approving loans without following the credit norms. Even they are giving out loans to dubious companies harming interest of depositors.
“Directors of banks have already approved thousands of crores of taka loans involving such ill practices with little prospect of recovery. The recent loan scams at Farmers Bank and some other new banks are the bright example of undue influence by bank directors,” he added.
“Businessmen turn bank directors are largely been involved in misusing public money by opening banks. Even the directors interfere with the management for disbursing loans, appointing and firing employees and dealing with some other money-related issues to serve their personal interests,” Toufic Ahmad Choudhury, Director General of Bangladesh Institute of Bank Management (BIBM), told The New Nation.
He said, “Such acts are going against the interest of the depositors and shareholders who are the real owners of a commercial bank. They can do this malpractice due to lack of proper law which is unimaginable in foreign countries.”
Regarding the controversial amendment of Banking Companies Act, the banking experts said if passed it will hamper the interest of the depositors and will have a negative impact on the whole banking sector of the country making the banks family concerns.
Terming the current banking crisis as an ominous sign for the national economy; they also urged the central bank to take proper steps to restore order in the banking sector.
“Unless order could be put in place the economy will face a serious setback,” they added.
Sources alleged that directors of the private commercial banks have already taken return of their investment manifold indulging in corruption and malpractices in loan disbursement.
