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Banking sector cripple, economy to face hard time

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Managing Directors of the private commercial banks in a chorus have demanded central bank's interference to stop sudden and hostile takeover of the banks saying that this kind of change creates unnecessary panic among the depositors. Chairman of Association of Bankers Bangladesh Syed Mahbubur Rahman in a meeting on Wednesday, presided over by Bangladesh Bank Governor Fazle Kabir, said that MDs have to pass their days in anxiety over their job insecurity in such situation.
Most of the banks are now struggling to survive in absence of proper monitoring. Widespread corruption, bad loans, fund swindling, hostile takeover and major changes in the top administration have made the banking sector cripple. The situation has turned for the worse, when some big businessmen took force takeover of some banks; those had reputation for good banking. Of them, the Chittagong-based S Alam Group captured over 50 per cent share of Social Islami Bank Limited through 19 companies without any query of the central bank, Securities Exchange Commission and National Board of Revenue where their source of fund is. It was alleged by Finance Minister AMA Muhith that, they had borrowed huge money from different banks to grab major quantity shares of other banks. The Islami Bank was also a victim of hostile takeover. In both cases, the two MDs were forced to resign.  
Besides, two new private banks recently have found almost bankrupt. The condition of Farmers Bank, owned by former Awami League minister Mohiuddin Khan Alamgir, is very poor. Besides, BASIC Bank and NRB Commercial Bank are now crippling. The specialized Grameen Bank has been functioning without full-fledged board, including a permanent managing director, for the last six years. Earlier, Sonali Bank was looted by Hallmark Group and Janata Bank by Bismillah Group. It is hard to believe that total default loans were about Tk125,307 crores till September 30 last year, according to BB data. Irrecoverable loans made the banks almost incapable to pay dividends to their shareholders while bad loans led to provision shortfall, capital deficit and created an adverse impact on the lending interest rates. When banking sector has been suffocating getting no fresh air, even then, several people are showing interested in opening new banks. Bangladesh Bank so far had received more than 80 applications and the Finance Ministry reportedly forced the BB to issue three licences.
Why the newly rich men are so much interested in opening banks? The answer is very simple. It is too easy to loot people's money by opening a bank. Nobody will ask about the source of fund and there is no one to check if the bank owners loot people's money. If the trend continues, the coming days would be crucial for the banking sector and the economy will have to face a hard time as none of the perpetuators who embezzled fund from the state-owned and commercial banks were punished properly till the date.

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