12:00 AM, November 11, 2012 / LAST MODIFIED: 12:00 AM, November 11, 2012

Public Commercial Banks

Race on to get into boards

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

Share this with

Copy this link
Rejaul Karim Byron

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.

Leave your comments

Share this with

Copy this link
Top