ANOMALIES and irregularities in the state owned Sonali and BASIC banks have mired the banking sector for the last three years following the collapse of the capital market. Poor management in Sonali Bank and the government’s indifference to the plundering of BASIC Bank have shattered people’s confidence in state owned banks. It also lowered the profits of the banks and the dwindling of loan disbursements, putting the country’s economy in turmoil. Obviously, Bangladesh Bank as the controlling bank and the government cannot escape their responsibilities in the Sonali-Hall-Mark loan scam involving Tk 3,547 crore and gross incongruities of BASIC Bank involving around Tk 4,500 crore, as the government truly runs both the banks. Such financial corruptions in most cases are unpunished as the perpetrators maintain a strong lobby with political high-ups, which encourage more anomalies that ultimately hamper the economy.
Sonali Bank which had reached near bankruptcy in 2012 due to the Hall-Mark scam, is still reeling from the after-effects of the coordinated scam, with its operating profits in 2013 plummeting as fear-gripped officials hesitated to give out fresh loans. Though the bank came out of it relatively unscathed due to the government injecting fresh funds into it, but in 2013 its full-year operating profits fell 70 percent to Tk 330 crore from the previous year. The bank’s deposits rose by about 15 percent but its loan portfolio shrank by 9.23 percent in 2013, exposing the inefficiency of the management as a consequence of the loan scams.
One of the best performing financial institutions till 2009, BASIC Bank has been mired in financial irregularities since Sheikh Abdul Hye Bachchu assumed the Office of Chairman in 2009. During his tenure, the bank’s indicators – from capital adequacy ratio to non-performing loans and credit rating – had witnessed a free fall. Interestingly, despite this dismal performance, Bachchu was offered a second term in office in 2012, for his hotlink with the government’s top brass. He single-handedly controlled the bank and granted loans in defiance of recommendations from the bank’s credit committee. And at last the government dissolved the Board of BASIC Bank, including its Chairman, following the recommendation of Bangladesh Bank in last February.
Meanwhile, a study revealed that around 30 percent of the banks carry ‘very high’ risks of online fraud and security threats. The study said ATM and plastic card transactions account for 43 percent of the frauds, the highest, followed by mobile banking at 25 percent due to poor investment in IT professional development while using ATMs and transactions through online which is being popularized. So, the banks should give due attention to this aspect otherwise hackers would empty the banks.
We find involvement of politicians in both the scams and without political influence such crimes could not have been committed in the previous term of the government.
We ask the central bank to monitor the banking transactions strictly so that banking malpractices and irregularities are stopped. Experts in banking must emphasize the importance of people’s confidence in the banking system. Bangladesh Bank is letting down the banking system by not using its supervisory role strongly. We cannot blame the politicians alone. Why the experts in the government should not shoulder the responsibility?