Abdul Hai Sarkar, Chairman of the Bangladesh Association of Banks (BAB) and Chairman of Dhaka Bank, has said that priority should be given to addressing weak banks which are failing to return depositors’ money. Stronger banks may come later. If reforms are to be applied to all banks, then these should be divided into several groups so the work can be carried out step by step. Attempting to reform both weak and sound banks simultaneously may undermine the success of Bangladesh Bank’s initiative.
Speaking to Bangladesh Pratidin, Abdul Hai said that the problems in the banking sector began during the Awami League government, when bank licences and ownership were granted to certain groups on political considerations. Following the fall of Sheikh Hasina’s government, only a handful of banks have faced serious trouble, while most others continue to perform well. Despite this, Bangladesh Bank has taken the initiative to amend the Bank Companies Act, affecting all banks together.
Under the proposed amendment, private bank directors who have served on boards for six years will be removed, no more than two directors from the same family will be permitted, and 50 percent of board members must be independent directors appointed from a panel approved by Bangladesh Bank. Commenting on this, Abdul Hai said, “If that happens, there is no point in having private banks at all. The government might as well nationalise all banks.”
He further said that the banks operating well have been doing so consistently, while the politically awarded banks are the ones in trouble. “Funds have been plundered from those banks. Around six or seven of them need reform first,” he remarked.
The BAB Chairman noted that private banks always operate under the rules issued by Bangladesh Bank. In many private banks, non-performing loans are only 5 to 10 percent, and at most 15 percent in a few cases. “Why then should 50 percent independent directors be imposed? If that is to be the case, what was the point of granting private banks in the first place?” he asked.
According to him, private banks that are performing well should not be interfered with. “Otherwise, unnecessary conflict will arise between public and private banks. We have no objection to measures being taken against troubled banks. But those that are limping along should be rescued first.”
Abdul Hai also pointed out that Dhaka Bank has been operating for 30 years. “Depositors place their money with us, we are investing, and everything is running smoothly. Why should there be unnecessary concern over this? If we are removed through amendments to the Bank Companies Act and replaced with new directors, will that guarantee better performance?” he asked.
Bd-pratidin English/ ANI
