Bailout fund for scam-hit state-owned banks again

Bangladesh Bank. – New Age file photo

The government is likely to set aside Tk 1500 crore in the upcoming national budget in bailout fund for scam-hit state-owned banks despite opposition from experts, think-tanks and right groups.
The proposed allocation is, however, Tk 500 crore less than the bailout fund of Tk 2,000 crore allocated in the outgoing budget, said senior finance ministry officials.
They said that the ministry had to keep the bailout fund on ‘political consideration’ despite opposition from different quarters.
On May 16, Transparency International Bangladesh in a statement urged that no bailout fund should be kept for the scam-hit state-owned banks in the next budget.
TIB executive director Iftekharuzzman noted that allocating ‘controversial’ bailout fund in the budget for 2018-19 would be ‘state incentives’ to loan defaulters and masterminds of loan scams.
Besides, economists at a pre-budget discussion with finance minister AMA Muhith in March opposed the government policy to use public exchequer to meet capital shortfall of banks caused mainly by loan scams.
As per financial institutions division data, Tk 9,788 crore was sanctioned for the scam-hit state-owned banks, including Sonali, BASIC and Janata, between 2012-2013 and 2016-17.
Sonali Bank, which failed to recover a single penny of Tk 3,500 crore gulped by little known Hallmark Group in 2013, was given Tk 3,005 crore in three phases to overcome its severe capital shortfall.
Once profitable BASIC Bank was given the highest Tk 3,390 crore in three financial years to meet its capital shortfall caused by shady loans of over Tk 6,000 crore during the tenure of its previous board led by its chairman Sheikh Abdul Hye
Bacchu, allegedly appointed on political consideration.
Janata Bank, facing loan scam over Tk 5,000 crore extended to little known AnonTex Group, received bailout fund of Tk 814 crore.
The finance ministry is, however, yet to disburse bailout fund of Tk 2,000 crore kept in the budget for the outgoing fiscal.
Ministry officials said that the fund would be disbursed after the announcement of the national budget, scheduled for on June 7, in parliament by finance minister AMA Muhith.
Centre for Policy Dialogue executive director Fahmida Khatun observed that repeated recapitalisation of scam-hit state-owned banks with public money should be continued no more.
‘Why should people pay for the malpractices and blunders committed by the banks’ managements appointed by the government on political consideration,’ she wondered.
On February 14, seven state-owned commercial and specialised banks, including Sonali, BASIC and Janata, demanded Tk 20,398 crore in bailout fund – Sonali Bank Tk 6,000 crore, Janata Bank Tk 2,500 crore, BASIC Bank Tk 2,500, Rupali Bank Tk 1,250 crore, Bangladesh Krishi Bank Tk 7,540 crore, Rajshahi Krishi Unnayan Bank Tk 800 crore and Grameen Bank sought Tk 21 lakh.
Former Bangladesh Bank deputy governor Ibrahim Khaled said that capital shortfall in the state-owned banks was the outcome of loan scams which in the long run turned into bad loans.
The defaulted loans in the six state-owned banks — Sonali, Janata, Agrani, Rupali, BASIC and Bangladesh Development Bank — increased to Tk 38,517.32 crore as of September 30, 2017 from Tk 34,580 crore as of June 30, 2017, according to statistics of the Bangladesh Bank.
According to Bangladesh Bank report, the defaulted loan was Tk 13,771 crore for Sonali Bank, Tk 7,599 crore for BASIC Bank, Tk 5,819 crore for Janata Bank, Tk 5,116 crore for Agrani Bank and Tk 4,251 crore for Rupali Bank.

Source: New Age.

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