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Monday, February 5, 2018 10:46:22 PM
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When Minister blames govt interference

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06th-Feb-2018       
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THE amount of classified loans in the Sonali Bank is very high, and one of the key reasons behind this is government interference, Finance Minister AMA Muhith said on Friday as reported by a local daily. He stated that the government interferes in all the six state-run banks, but it is more so in case of the Sonali Bank. As of September last year, Sonali Bank's total classified loan stands at Tk 11,964 crore, which is 36 percent of its total loan, according to central bank data.

Sonali Bank Managing Director Obayed Ullah said the bank had to shell out from its coffers Tk 200 crore every year to provide various services to the government without any charge. Since 2007, when the bank began its journey as a company, it adjusted Tk 5,917 crore in accumulated losses, out of Tk 6,574 crore. But it still has a capital shortfall of Tk 5,693 crore while its bad debt has almost tripled since 2009.

In the last eight years, the government pumped Tk 3,000 crore into the bank in bailout money and the bank has sought another Tk 6,000 crore. On behalf of the government, the bank repays the public for the savings certificates, for which the bank has to set aside Tk 4,000 crore. Although the government reimburses the money, sometimes it takes a long time.

Sonali Bank also lends money to state agencies such as Bangladesh Petroleum Corporation and Bangladesh Jute Mills Association. The government repays the sum through bonds at 5 to 7 percent interest rate with a maturity period of 20 to 30 years. This results in a loss of Tk 1,000 crore a year. The bank provides 37 services to the public for free and 14 services at a low cost.

The poor Sonali Bank has become a victim of the inability of the government to repay the bank. It seems that; it is providing services to the public which greatly add to consumer welfare. But the reality is that; it shelled out over Tk 3600 crore to firms like Hallmark. Till date only a few low level officials have been indicted but no directors of the bank have ever been charged. While the Hallmark boss is behind bars the government can't find anyone to buy its assets to recover a meager portion of its lost money -- no one knows why.

Providing services to the public at little or no cost is no excuse for being in the red. Tampering with financial institutions is like choking the lifelines of the economy. If the Finance Minister feels himself incapable to run his Ministry due to the 'interference' - then why he is wasting time staying in the post?

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