Bangladesh Bank flouts own rules
It defies rationale that the central bank would relax its own rules of business to allow for four state-owned banks and one government financial institution to inject Tk 715 cores into the troubled Farmers Bank. BB's investigations into the bank found that its top brass is complicit in the financial meltdown that involved the former chairman and ex-chairman of the executive committee. Yet, we find that instead of ordering structural changes in the way the bank is managed, the central bank is more interested in replenishing the bank's fortunes.
The rules have been relaxed so that the bar on one director of a bank holding the same position in another is now not valid and four managing directors of state-owned banks will sit on Farmers Bank. These institutions will in effect have more than 10 percent share of the bank which is a violation of Article 14 of the Act, while the central bank has cited another article of the Act that allows it to relax any rule upon suggestions from the government. So, are we to surmise that since this bank is partly owned by a lawmaker, the rules do not apply? Again, precisely what sort of message is being given to other financial institutions which may be susceptible to scams? Unfortunately for us, it seems that far from bringing about changes that would re-establish discipline in the financial sector, the BB has chosen to pump in money to these bottomless baskets.