It is hardly surprising to find that state-owned banks are in doldrums. As pointed out in national media, never have so many directors been appointed in these banks as has been during the tenure of the present government. The problem is that most of these directors have no inkling as to how a bank operates. Such appointments have opened the flood gates to sanctioning unworthy loans based on political considerations rather than due banking procedures. It is little wonder that most state-owned banks are facing a rating crisis.
It comes as a shock that despite experiencing the single largest scandal in the banking sector revolving Hall-Mark group, the government remains committed to making the same mistakes, i.e. many directors with dubious records but sporting political colour are in the process of having their contracts renewed. Reportedly, a number of politicians too are making their debut at directing banks. It is said there is a first time for everything, but must we play with our financial future by appointing people with no proven banking track record and who owe their allegiance to party and institutions second?
It is mindboggling to see former student leaders and party organisers ten-a-penny being appointed right, left and centre at the top echelons of state-owned banks. It is of grave concern that the central bank's circulars on rules and regulations concerning what a director can or cannot do are gathering dust on shelves. Rules are there that specify code of conduct of directors. But when these are flouted in terms of interfering in administrative work, creating undue pressure to facilitate sanctioning of essentially bad loans, we have a major problem. It would appear that the government has failed to take any lesson from the Hall-Mark debacle. Rather, its actions are paving the way for more debacles in the financial sector -- scandals that will seriously imperil an already fragile financial sector.