Bank directors, top brass to be on a monitoring platform

All directors and top brass of the country's commercial banks are to be on a hold-all platform called key performance indicator (KPI) in a latest reform measure meant for ensuring good governance in the banking industry, reeling from past misrule, official sources say.

As part of the reform innovation, the central bank will soon form a special committee of experts and the omnicient panel will oversee the performances of the banks' board-of-directors members along with the top executives to bring the must-have discipline in banking operations.

"Performances of the banks' board members will be assessed every six months and the banking regulator will act accordingly", says a source in the Bangladesh Bank.

Apart from bank directors and top executives, the banking regulator will, simultaneously, evaluate performances of the BB-listed audit firms to make sure proper auditing is done in the commercial lending entities without doctoring documents

Seeking anonymity, a BB official has said there are multiple factors that spawn malpractices in the banking operations and that they plan to prevent the prime sources through strengthening the regulations, which are "very essential".

The official mentions that they have been overseeing performances of the managing director and chief executive officer of banks to check mismanagement. Without monitoring activities of the banks' board members, ensuring good governance "will extremely be difficult because they, in some cases, intervene in the activities of the management, which may lead to violation of the regulations".

"So, we are planning to bring board members and the top executives of the banks under the KPI, and it will be assessed every six months to ensure governance in the industry," the central banker told The Financial Express.

The BB official also informed that the regulator will rigorously be evaluating auditing performances of the BB-listed audit firms to prevent the scope of hiding something through wrong auditing practices.

"We'll form a committee soon to oversee the KPI," the central bank official added.

Chairman of the Bangladesh Association of Banks (BAB), an apex body of the country's banks' shareholders, Abdul Hai Sarker says this is "okay", but hastens to add: the problem is the regulator has been changing the regulations too frequently that created doubt in him whether the central bank will be able to execute the regulations properly.

He says the bankers keep requesting the BB not to make changes too frequently in the "highly sensitive sector. But, "unfortunately, they did not listen to us and keep changing the regulations."

The BAB chief strikes a note of cautious optimism about the latest innovation in reforms in the banking sector--with mergers and acquisitions of problem banks on top--as part of a vast reform recipe being pursued by the post-uprising government for an avowed state rebuilding.

"Let's see where the boat anchors," says Mr. Sarker, also chairman of Dhaka Bank, in metaphorical terms.

Chairman of National Bank PLC Abdul Awal Mintoo sounds a bit critical in appreciating the new move. The central bank plans to bring banks' directors and top executives under the KPI, "which is good", he says.

But the massive malpractices that the country witnessed in the last several years had basically occurred "before the nose of the banking regulator". There were the BB-appointed observers in many of the problem banks. "What they did when such wrongdoings took place in those troubled banks?" questions the businessman-turned politician, currently holding the position of vice-chairman in the Bangladesh Nationalist Party or BNP.

"I think the roles of the regulators need to be assessed the same way," he quips.

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