Putting water in the sand?

We find it absurd that the state-owned banks should ask for Tk 20,000 crore allocation in the next budget, despite continued poor performance of some of these banks. We have been pointing out the folly of bailing out corrupt institutions which refuse to institute changes in management in spite of several scams over the years. Regrettably, no significant steps have been taken to reform loan giving mechanism and oversight process of these banks. These are good examples of bad management and flouting of all banking rules to approve loans to parties that simply do not qualify for mega-sized bank credit!

Sadly, all advice by banking experts and the government's own fact-finding missions have been ignored. Instead, till date the government has tried to bail out these banks by pumping in Tk 14,505 crore of taxpayers' money. On the other hand, severity of the matter has been trivialised by terming the sums involved as peanuts.

Recapitalisation of public banks cannot take place year after year without taking concrete steps to plug the holes in the system that allow for loans to be given to dubious parties. While the small and medium sized enterprises that form the backbone of the economy find it very difficult to get loans from state-owned banks—here we are, handing out thousands of crores of taxpayers' money to banks that will continue to give out loans that will in all probability go "bad." Today, the banking sector is in a sorry state, and unless the plunder is stopped, the regression may be irreversible.