Performance deals with SOBs turn into eyewash: economists

Shakahwat Hossain | Published: 23:07, Jun 19,2017 | Updated: 00:14, Jun 20,2017


Annual performance agreements introduced three years ago by the government has failed to improve the performance of the state-owned banks.
As the overall financial condition of the state-owned commercial banks has deteriorated, economists said that the much-hyped reform initiative to improve service delivery of the government entities was nothing but eyewash.
Former adviser to interim regime Mirza Azizul Islam said that the initiative turned up as eyewash with no sign of improvement in performance of government financial entities.
As long as political interference would remain, there would be hardly any scope for improvement in the public sector banks, he said.
Mirza Azizul’s comments came a day after financial institutions division once again signed annual performance agreements with state-owned commercial banks and specialised banks on Sunday for fiscal year 2017-18.
The signing ceremony was held less than a week after the government gave bailout fund of Tk 2,000 crore to state-owned banks including Tk 1,000 crore to scam-hit BASIC Bank and Tk 300 crore to scam-hit Sonali Bank.
Sonali and BASIC banks had received Tk 6,095 crore from the public exchequer in the past four years for meeting their capital shortfall although the banks faced the situation because of unprecedented loan scams, economists said.
Policy Research Institute executive director Ahsan H Mansur said that the Annual performance agreements would not be effective unless the government tightened the monitoring system.
He recommended that a provision should be there in the annual evaluation for punitive actions for failure to achieve the target by the subordinate bodies.
Government officials, however, said that there was no provision of punitive actions in the current annual performance agreements introduced in 2014-15.
The agreements were signed between the banks and financial institutions division and state-owned banks with specific targets, including recovery of defaulted loans and term loans and reduction of loss making branches of the banks.
Banks and financial institutions division secretary Eunusur Rahman said that they might complete the review of the performance of the banks in the outgoing fiscal by September or October.
He denied that the current initiative had turned into eyewash.
He said that it would take three or four years more to get positive outcome of banks’ performance through the current initiative.
In a report released on Sunday, Bangladesh Institution of Bank Management said that the state-run banks were losing their influence on banking services in foreign trade.
Import transactions through these banks came down to 7 per cent in 2016 from 27 per cent in 2011 while transactions through commercial banks rose from 64 per cent in 2011 to 85 per cent in 2016, said the report.

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