Fund feeding not enough for problem banks' sustenance

Troubled banks cannot be sustainably revived by only giving some money to improve the liquidity of the crisis-ridden commercial lenders, says the new chief of bankers and suggests a holistic remedy through coordinated actions.

The newly made chairman of the Bangladesh Association of Banks (BAB), Abdul Hai Sarker, thinks alongside the fund-feeding steps, the banks concerned and the central bank should take concerted efforts to bring back confidence of the general depositors in the banks, which will be essential for sustainable operations of the banks in the long run.

"But it is very tough job to do. Banks, regulators and media need to come forward with their constructive roles to salvage the problem banks," the chairman of BAB, the apex body of the country's banking sector's shareholders, said while sharing his views in an exclusive interview with The Financial Express (FE) recently.

To revitalise some 8-9 struggling banks, he mentioned, the Bangladesh Bank (BB) has taken a gigantic programme to salvage the banks, which is good.

"The fundamental of the salvage should be to develop confidence in the minds of the depositors. By giving only some money to improve the liquidity of the troubled banks will not help to revive them," he said.

The bankers' leader feels salvation of the banks largely depends on the executives who need to ensure smart and maximum use of the funds.

He is highly critical of the rule of the immediate-past Awami League government, saying that a mountain of problems have been created in the financial sector over the last 17 years. There was no discipline in the banking industry.

"So, bringing back order and discipline in the sector will be extremely difficult. For the daunting task, all the shareholders need to act proactively and effectively," suggests Mr Sarker, also chairman of Dhaka Bank.

Regarding his new leadership, the BAB chairman said he takes the charge at a challenging time when the country's banking sector is under immense pressure. "So, it will be very challenging task for me as well."

He said the BAB as the apex body of the country's financial sector remained ineffective for the last 17 years, which was one of the reasons behind the poor state of the banking industry.

"My responsibility is to make this platform effectively active. It will not be used as only a toll-collective body in the coming days. I must uphold the association for which it is created," the BAB chairman said.

Regarding his expectation from the regulator, he said the regulator should consult the stakeholders before formulating any policy for ensuring effective implementation of the policies.

"Nothing should be imposed. The culture of imposition must be ended. We should be heard in the policymaking process," Mr Sarker said.

Suggesting imposing a strict control over the social media, he said there are people who often share and discuss financial matters without proper sourcing that basically creates confusion and panic among the depositors, particularly in the rural areas where the scope of cross-checking the information is limited.

"This (misleading information) needs to be stopped. People need to be responsible and accountable in sharing any financial issue to prevent any unholy move to destabilize the industry," he says about how to proceed in the changed situation of the country.

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