WORLD NEWS

An article written by me on the Corpor-atisation and Privatisation of the Nationalised Commercial Banks (NCBs) was published in the issue of the daily Ittefaq dated 5 September, 2007. That article contained a few suggestions of mine about the ways the nationalised commercial banks could be rendered profitable and lucrative orgainsations in the era of privatisation under the system of free-market economy. But my suggestions fell flat on deaf ears of the concerned authorities. Those organisations under government management took no notice of the guiding principles shown by me. On the contrary, in the name of development the overbearing political influence and too much of undue government control made the four state-owned banks virtually lame ducks. According to the advice for reform by the donor organisations, there was a wretched apology for reforming only by an addition of the word ‘limited’ to the names of these banks. In the management of the banks the names of departments were also changed. Except this no tangible result was seen as this far was the nominal reform in this sector.
Five years have elapsed since the backdrop has radically changed. In the changed circumstances, it has become necessary to state correctly the gap between the supposed reform and the actual state of revamping. People recently have come to know of the massive scam and embezzlement in the nationalised banks. Now it can be safely said with the least hesitation that the reform, whatever little it might be, was done not for augmenting the interest of the genuine businessmen, industrialists or the customers; rather it was done to create an opportunity for the looters for making mint and their apportionment.
I have a long experience in banking at my credit. The development of the state owned banks needs double quick steps and in that context my suggestions to the government and the donor group are as follows:
1. To give more teeth to the managing board of the NCBs;
2. To enhance the power of the management authorities;
3. In order to earn profit in banking business the long loosing branches should be shut down and transferred to the nearby branches;
4. To take up programmes to raise the goodwill and reputation of the banks;
5. To increase the capital of the banks as and when necessary;
6. To raise funds through floating of shares in the market,
7. To appoint commission agents for quick recovery of bad debts or to arrange for sale of the defaulting loans;
8. To devise new attractive schemes for the customers and for the survival in the stiff competition with the private banks;
9. To take steps to build the state owned banks as more profit-earning organisations;
10. To bring the banking to the doorsteps of the people with service-oriented mental attitude;
11. To take stern steps so that none can indulge in favouritism, nepotism, swindling, financial irregularities and corruption;
12. To bring transparency through appointments of skilled men and persons trained in institutional education;
13. To frame pay structure like that of private banks;
14. The control of the state owned bank administration by more than one organisations is by no means desirable; only the capable organisation in banking matters should have the controlling authority;
15. To halt political appointment in the managing committee, former bankers, economists, accountants (Chartered accountant and cost accountant), journalists experienced in economic and financial journalism and professors should be appointed in the board;
16. To ensure regular attendance of the chairman of the managing board; to stop unnecessary meetings and undue meddling in the work of the managing board;
17. To ensure proper and standard banking service to the people;
18. To preserve and protect the deposits of the customers and maintain strict secrecy about the information of their deposits;
19. To ease the transaction process and meet the demands of the customers within the shortest possible time;
20. To ensure full security of the bank employees and customers and clients;
21. To form panel of legal experts highly proficient in company law with a view to quick settling of the cases filed in the Artho Rin Adalat and rapid recovery of bank loan;
22. To keep sharp vigil so that the assets of the bank are not sold away at a very nominal price and to prevent anybody belonging to bank, e.g., different associations, unions from participating directly or indirectly in the auction. There must not be any political influence working in this matter.
As a banker and a student of accountancy I think the recommendations as stated above are indispensably necessary for removing the mess in the state-owned banks. Everyone expected that the World Bank and the International Monetary Fund (IMF) would bring about a reform in the true sense of the term through corporatisation and privatisation of the state owned banks.
But the program of the donor agencies bore no fruit. Hallmark loan scam not only shattered the image of the economic arena, but also it gave a serious jolt in the political field. I think it the biggest incident of embezzlement since the independence of the country which has been done through only one branch of the bank. Besides, in some state owned banks there have been misappropriation of huge funds through fake loans. The persons involved in Hallmark scam including the chairman and directors have been rehabilitated in their posts. This is certainly an award to the looters.
The advice of reforms by the donor agencies has been misled during the last five years. The main term of the World Bank and other donor agencies was that no person, who has worked in government sector, will be appointed Managing Directors or CEO of the state owned banks. But this condition was flouted. The persons during their employment in the banks would draw salary including perks less than Taka one lakh. But at the initial stage they would draw Tk 9/10 lakh according to the recipe of the World Bank. The disparity in pay scale created discontentment in the employees of the lower rung of the ladder.
A sort of frustration was prevailing among the lower rank officials including DMD and GM. This frustration led to corruption. It cannot be denied that wearing the skin of a tiger the cat cannot turn into a tiger. The Managing Director who drew a salary of less than Taka one lakh previously cannot be made a tiger or a lion or a bionic man with a pay of Taka 9/10 lakh. The concept of the donor group that the Chief Executive officer with a fat salary will be able to solve all the problems in a moment has been frustrated. The massive Hallmark scam has proved very eloquently the incapabilities of such high ranking officials including the CEO.