Inertia to check wilful loan defaulters and lack of political will to nab the masterminds of loan scams are the major reasons for the abysmal condition of the state-owned banks, said senior government officials and bankers.
At a workshop organised by Financial Institutions Division of the finance ministry at the CIRDAP auditorium in the capital on Saturday, they said that wilful loan defaulters were let off scot-free while former controversial chairman of BASIC Bank could not be brought to book despite his involvement in providing massive shady loans.
‘These are our failures,’ said parliamentary standing committee chairman Abdur Razzak taking part in the discussion on challenges and way-outs of the state-owned banks.
Without mentioning the name of Sheikh Abdul Hye Bachhchu, Razzak said loans worth Tk 2,900 crore provided by the former BASIC Bank chairman to fictitious borrowers are still traceless.
The Anti-Corruption Commission or the other government agencies have been recommending repeatedly taking action against the masterminds of the BASIC Bank loan scam, he said.
Agrani Bank chairman Zaid Bakth said a former BASIC Bank director, now deceased, had submitted a written allegation of unlawful activities against the former chairman to the finance ministry much before the loan scam of once profit-making BASIC came into light.
According to the Financial Institutions Division, the non-performing loans in six state-owned commercial banks — Sonali, Janata, Agrani, RupaIi, BASIC and BDBL — stood at Tk 34,581 crore or 27 per cent of the overall loan portfolio till June.
Terming the level of NPL of the state-owned commercial banks horrendous, finance minister AMA Muhith, however, blamed the bankers for the unwanted situation.
The bankers always tried to keep their clients in their grips, he said, noting that they never maintained schedule for providing loan.
Besides, the bankers did not care about the working capital after providing loans to the clients, he said.
Muhith said growing NPL finally led to capital inadequacy of the state-owned banks while the government faced severe criticism for recapitalising the banks from the budget.
He noted that recapitalisation was a must to save the banks from bankruptcy.
The state-owned banks received bailout fund worth Tk 9,639.86 crore from 2012-13 to 2016-17 with scam-hit Sonali and BASIC receiving 66 per cent or Tk 6,395 crore.
State minister for finance and planning MA Mannan suggested that the public banks should decrease the wastage of fund as well as the amount of NPL.
Chairmen and managing directors of the banks said they were facing capital inadequacy for keeping provision and image crisis in doing business with foreign banks for negative picture projected in the media.
They also said they were panicked due to ‘unnecessary’ intervention by the ACC.
BASIC Bank current chairman Alauddin A Majid said that the ACC should catch big fish instead of small fry.
Criticising the government for appointing directors to the bank’s board of directors on political consideration, he observed that the government had created scope of corruption by appointing politically motivated directors.
Bangladesh Institute of Bank Management director general Toufic Ahmed Choudhury said that the present poor condition of the state-owned bank was an upshot of a deliberate attempt by a vested quarter.
He said political commitment is required for the banks to stage a turnaround from the present crisis.
Federation of Bangladesh Chambers of Commerce and Industry director Abu Naser recommended action against both the wilful and habitual loan defaulters.
The defaulted loans in the county’s banking sector that comprises 57 public and private banks stood at Tk 1,11,347 crore till April, 2017.
But only a few out of total 2 lakh defaulters hold the majority of the defaulted loans against the backdrop of slow disposal rate of cases in the Artha Rin Adalat.
Among others, Bangladesh Bank governor Fazle Kabir, Finance Division secretary Hedayet Ullah Al Mamoon, Insurance Development and Regulatory Authority’s newly appointed chairman Shafiqur Rahman Patwari and its member Gokul Chand Das took part in the discussion.
Mamoon said directors appointed by the government have no liability.
He said directors could be liable when the government would divest a major portion of the banks.
Gokul Chand said punishment should be introduced for managing director of the public banks.
He also suggested that all public banks except Sonali should be merged gradually.