Errant Directors must face music
Only recasting Basic Bank Board won't help restore depositors' confidence08 July 2014 Kazi Zahidul Hasan
Senior bankers and financial analysts on Monday urged the government for taking punitive measures against the errant board members of the Basic Bank in a bid to restore depositors' confidence and discipline in the public banks.
They are also skeptical about the government's move to rescue Basic Bank from its present crisis by only restructuring the bank's board of directors unless bold steps are taken to recover the stolen money from the bank.
"The government should go tough against the errant board members and bank officials who helped a vested quarter for swindling Tk 4,500 crore from the bank," former Bangladesh Bank
(BB) Governor Dr Salehuddin Ahmed told The New Nation yesterday.
Terming the government's latest move of dissolution of Basic Bank's board is a 'belated realisation,' he said, the change of the board of directors would not bear fruits unless it chose right persons in the boards with exclusion of 'politically-appointed' directors.
He opined that 'politically-appointed' directors failed to bring much benefit to the state-owned banks rather helped distort financial health of the banks by approving loans to fake companies violating banking norms.
"So, restructuring the board will be meaningless until the errant board members are punished and the issue of getting back the money that siphoned off from the bank was settled. In case of failure, it would lead to recurrence of similar incidents of loan scandals in both public and private banks," he added.
The former BB governor also urged the government's regulatory bodies to carry out an in-depth investigation into the loan scams of Basic Bank to identify the people behind the mischief.
"The directors of state-owned banks were found involved in loan scandals and corruption should be taken under the book," former adviser of the caretaker government Dr Mirza Azizul Islam said.
If the delinquent directors remain untouched, it would have far reaching impact on the whole banking sector, he said, adding, a confidence crisis is building among the depositors minds and failure to bring the culprits under the book would further widen the crisis.
He also said the government needs to reform all the boards of the public banks immediately with inclusion of competent and knowledgeable people to tackle the strain of the public banks and restore people's trust on them.
"Once the government can pick the right persons in the public banks it could help infusing dynamism in the crisis ridden banks. It would also help curb corruption and irregularities in the banks," he said.
When asked, he said, there are serious lapses in the regulatory and supervisory regimes in the banking sector. Both the respective banks and regulatory bodies have failed to ensure effective oversight and risk management, internal control and customer interest protection. So, it has been providing sufficient space for recurrence of financial irregularities in the banking system, he added.
He also blamed BB for poor monitoring of the banks and it is leading to embezzlement of huge funds from the banks.