Banks losing money again

SOME state-owned banks like BASIC appear to be unable to shake off malpractices. Such is its condition that repeated scandals running into thousands of crores of Taka are still being lost to bad loans. According to central bank data, the banking sector's default loans now stand at a little over Tk51,000crore of which BASIC bank alone accounts for over 2000 crore.

Although banks across the board, including foreign owned institutions have recorded a rise in classified loans due to multifarious reasons including violent politics last year, that BASIC alone accounts for two-thirds of the total increase in bad loans gives off a stink of something fundamentally wrong with the way it handles its loan portfolio.

Inspections by the Bangladesh Bank into the scams that hit state-run banks over the course of last year unearthed a number of systemic faults that allowed for sanction of bad loans. Some of those loopholes have been addressed, many have not. In the case of BASIC Bank, we are astonished to see that the malpractice of sanctioning loans without proper scrutiny is still in operation.

We find unacceptable what has become a practice for the government to bail out graft-ridden management of state-owned financial institutions. How else can one explain the government's recent injection of several thousand crores into loss making state-owned financial institutions? This is public money that is being squandered because authorities lack the political will to rectify bad practices which will put an end to the established norm of graft in these banks.