State-owned banks continue to bleed

When the finance minister states that some state-owned banks (SoBs) flout the rules to give loans to dubious entities and individuals without collateral, it is a frank admission that things are anything but normal. It is unthinkable that after major financial scams like Hall-Mark and Destiny a few years ago that rocked the banking sector to its foundations, we continue to experience incidences where a gold trader can get a loan worth Tk 151 crore without any major scrutiny. The question we have to ask is whatever happened to the multi-pronged reforms that were supposed to bring some check-and-balance into how loans are approved.

Despite what is being stated at policy level, the loan scam at Rupali Bank shows major discrepancies. While Tk 60 crore was approved by the board, the remainder Tk 73 crore required no approval. Even more interesting is that the documentation related to the unapproved amount has magically disappeared. There have been allegations that the order to bypass scrutiny measures came from the "top". Now if there is even a modicum of truth in there, we must assume that the SoBs have degenerated into money pits for the well-connected, and funds, that are public funds to begin with, are open for grabs.

Financial irregularities have now become entrenched in SoBs and only serious political will can pull these institutions out of the red. The alternative would be for the finance minister to keep putting in thousands of crores of Taka every fiscal year in annual bailouts. This is a total waste of public expenditure and for what? Allowing such malpractices to continue merely affect financial stability and growth prospects of SoBs.