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Saturday, July 26, 2014

Sunday, November 11, 2012
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Public Commercial Banks

Race on to get into boards

No appointment of directors in 2 months due to lobbying by political aspirants

Powerful vested interests are lobbying for the posts of board directors of state-owned banks that have been plagued by irregularities due to interference from some outgoing directors with political affiliation.

The tenure of the boards of state-owned commercial banks (SOCB) expired in the first week of September but the government could not appoint board directors due to intense lobbying from vested quarters, said a finance ministry official.

There are allegations that some of the directors take commissions from business firms as well as individuals for helping them get loans from state-owned banks, said the official.

Officials in the finance ministry's banking division said they are clueless about who might get appointed as SOCB board directors. They will move to make the appointments once the finance minister gives them a list of selected persons for the posts.

Some former SOCB directors have been lobbying government high-ups to get appointed once again. Besides, people with political affiliation are pursuing the same purpose, said sources at the finance ministry and the Prime Minister's Office.

The present government appointed some former leaders of Jubo League and Chhatra League as SOCB board directors after coming to power in 2009.

Khandker Ibrahim Khaled, former deputy governor of Bangladesh Bank, told The Daily Star that there is no policy now for appointing SOCB board directors.

Khaled, also chairman of Krishi Bank, said there should be a specific criterion for the appointments, and a sub-committee should be formed to select candidates for the job.

State-owned banks made some progress as a result of implementation of the World Bank's Financial Sector Reform Programme but it was hampered in recent times due to interference by some directors with political affiliation.

Unprofessional people, including those with political affiliation, were appointed as SOCB board directors, said Khaled.

He said the board's responsibility is to oversee whether a bank is functioning properly but the SOCB board totally failed to perform this job for wrong selection of people as board directors.

In September, a central bank report said the overall control system of state-owned banks has broken down for weak internal monitoring.

It said a number of big corruption scams, including that of Hall-Mark, have been detected in SOCBs in the recent times.

A central bank official alleged that some board members are also involved with it and the BB informed the finance ministry about this.

The report said unadjusted inter-branch transactions in state-owned banks have been on the rise. The amount of such unadjusted debit account was Tk 37,253 crore in May last year.

A bank official said if any branch transacts with another branch of the same bank, the head office maintains a debit account through which the transaction is adjusted later. But if there is any anomaly in the transaction, it is not adjusted.

The BB report showed that though there have been improvements in different economic indicators of SOCBs since 2009, several indicators have started falling in recent times. And one of them is default loan.

According to the report, default loan increased by Tk 1,576 crore in June this year, compared to December last year.

The state-owned banks never used to borrow from call money market, rather they would lend money. But from the beginning of the last year, they started borrowing frequently from inter-bank money market.

The central bank has written to the SOCB board chairmen and the finance minister several times, giving warning about it.

The report shows Sonali Bank borrowed Tk 645 crore, Janata Bank Tk 359 crore and Agrani Bank Tk 557 crore from call money market on an average every day in 18 working days in June this year.

A former BB official said the central bank had earlier written to the finance ministry about the SOCB directors' interference but the ministry was reluctant to take action against them.

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Major state-owned banks have destroyed by some politically appointed board directors and some greedy bank officials. Some banks had directors who are very low profile people changed their luck by looting bucks from banks. Central bank must have mechanism to engage experienced directors such as retired civil servants, university professors with commerce background etc.

: Sengupta, Canada

A poor under develop economy like Bangladesh needs a healthy well functioning public sectors banks. These financial institutions are backbone of economy. But with rampant corruption and unethical appointment of high official these public sector banks play the role of proxy political power. The Finance Minister is busy how to damage the image of Dr Yunus with lies and silly comments. Where does he have the time to think of appointing good qualified candidate for public sector banks?

: barkat

Comments

  • Shekhar Dev
    Sunday, November 11, 2012 11:19 AM GMT+06:00 (89 weeks ago)

    All issue about banking sector should be handed over to Bangladesh Bank from the finance ministry. We have to reinforce our Bangladesh Bank in all subjective issue of banking. All kind of illegal practice is taking place in this sector only for lack of taking far-reaching action of the finance ministry.

  • Andrew, Betong
    Sunday, November 11, 2012 03:59 AM GMT+06:00 (89 weeks ago)

    To settle this problem, employ foreigners for the time being.

  • MR
    Sunday, November 11, 2012 09:03 AM GMT+06:00 (89 weeks ago)

    Why not privatise all the state-owned banks? Who need them if they are nothing but den of looters?

  • Md.Tanver Ahmed
    Sunday, November 11, 2012 10:07 AM GMT+06:00 (89 weeks ago)

    It is the perfect time to appoint some Accounts/Finance professionals in SOCB directors to recover the image of govt. as well as rescue the state-owned banks.

  • Prof. Lutfor Rahman
    Sunday, November 11, 2012 01:51 PM GMT+06:00 (89 weeks ago)

    Just politics cannot be the qualification for a person to become a director of any state owned bank. A person with experience in relevant field with higher degrees should be considered for such position. For example; treasurer of a university can be a right choice. He can contribute as well as achieve some knowledge that might enable him to prepare annual budget for the respective university. University problems particularly in finance can be reduced if this suggestion is implemented.

  • Ahsan Shahriar
    Sunday, November 11, 2012 03:01 PM GMT+06:00 (89 weeks ago)

    When government policy planners, both its finance boss and those in the helm of the ministry concerned, will be able to hear the professionals' and public outcry to put financial institutions in order with strong political will and thus sending a clear messages to the vested lobbyists. If government demonstrates its maturity in handling this sensitive issue and that is a high expectation at this critical point of time, it will ultimately help safeguarding its political image that dampened and damaged so far to heal up, just one year of the electioneering time remaining.

  • suahmed
    Sunday, November 11, 2012 06:04 PM GMT+06:00 (89 weeks ago)

    The retired reputed Bank officials and economists should be nominated to the board of Directors through a transparent process to save the state owned Banks from corruption and irregularities.


 

 


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