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Almost everyone, starting from top policymakers down to banking sector experts, is worried about the future of the state-owned banks. Newspapers do dedicate enough space regularly to highlight their precarious state.
The multilateral donor agencies are no less worried about the moribund state of these banks. A World Bank mission due to visit Bangladesh soon does also have on its agenda the state of the public sector banks.
As scams after scams involving loans rocked the state-owned banks, everybody expected that the government as an owner would initiate a few tough and effective measures to streamline the affairs of these banks.
But the content of a report published in a vernacular business daily on Thursday would lead one to believe that these banks are incorrigible and the government is not at all interested to put them on track.
The report goes like this: An individual while serving as a senior principal officer (SPO) at the local office of the Sonali Bank, the largest state-owned commercial bank, went on retirement in 2010. But he served the bank for another five years on contractual basis as the authorities found his services 'indispensable'. After expiry of the contract in 2015, lawfully, he does not have any role in the day-to-day business of the bank. But that person comes to the local office of the bank on every working day, attends office works and goes back home at the end of day's business. The SPO reportedly does not take any money from the bank for his work. One deputy general manager in-charge of foreign trade section at the local office says the retired SPO comes to office since the higher authorities of the bank want him to do so. However, the general manager of the same office did express his surprise at the news about the retired officer's coming to the office daily and attending office business.
There is no reason to see the incident involving the retired SPO at the local office of the Sonali Bank as an isolated one. The local office branch does handle most public sector letters of credit (LCs). A number of small but powerful groups that include CBA leaders, politically influential officials and loan lobbyists are at work at the branch and also at the head quarters of the bank. These groups do play a decisive role in loan sanction, LC opening and appointment and transfer of officials and employees of the bank. Many officials manage to stay at the same branch for more than 9 to 10 years though the rule concerned necessitates transfer of an official after three years.
The decline in the financial health of the public sector banks has reached a dangerous level. Most of them have been, year after year, pleading with the government for bailouts. The government does also keep aside an amount for their capital replenishment. However, the amount remains far short of their requirements. The government would never be able to float these banks properly since irregularities, financial or otherwise, are so massive that no amount of money, seemingly, would be enough to rescue them.
The situation prevailing in the public sector banks calls for a thorough reform of their management and financial operations. The government is also not interested, it seems. This is evident from its retreat from the move to form a Banking Commission. It is likely the proposed commission would, at the first instance, suggest an end to government's control over the public sector banks as a meaningful step towards streamlining their operations. This is also clear by now that the government does dislike such an idea.