The government has given Tk 14,655 crore to bail out state-owned banks including scam-hit BASIC Bank and Sonali Bank in eight years.
A total of Tk 11,487 crore or 78 per cent of the subsidy, which the government calls recapitalisation fund, was given in the past four financial years between 2013-14 and 2016-17.
Major portion of the allocation in the past four fiscals went to largest state-owned Sonali Bank and once profit-making BASIC Bank as bailout fund after both the banks were hit hard by loan scams.
According to an internal document of the finance ministry, the government provided Sonali and BASIC banks with Tk 6,095 crore in the past four fiscals.
Sonali Bank received bailout fund of Tk 1,995 crore in 2013-14 fiscal and Tk 710 crore in 2014-15 fiscal after the single biggest loan scam of Tk 3,500 crore to little known Hallmark Group was detected in 2012-13.
Sonali Bank is yet to recover any money from the Hallmark Group.
BASIC Bank was provided with a bailout fund of Tk 1,190 crore in 2014-15 and Tk 1,200 crore in 2015-16 after it lost about Tk 6,000 crore to fictitious borrowers.
Although the huge shady loan was extended by controversial board of directors led by former BASIC Bank chairman Abdul Hye Bachhu the government was yet to take any action against Bachhu because of ‘political reasons.’
In 2013-14 fiscal, the government also provided bailout funds of Tk 810 crore to Janata Bank, Tk 1,081 crore to Agrani Bank, Tk 210 crore to Rupali Bank, Tk 175 crore to Bangladesh Krishi Bank and Tk 80 crore to Rajshahi Krishi Unnayan Bank.
Economists and experts continued to criticise the government for giving such subsidy to the scam-hit banks as the same measure put no positive impact on the financial health of the state-owned banks.
They termed the bailout fund given to the scam-hit banks an act of putting public fund into black holes.
Paying no heed to the criticisms, the government is going to give bailout funds
to BASIC Bank and Sonali Bank in the current month from the budgetary allocation of Tk 2,000 crore kept in the budget for the outgoing 2016-17 fiscal.
Finance minister AMA Muhith also proposed an allocation of Tk 2,000 crore for recapitalisation of the state-owned financial institutions in the proposed budget for 2017-18 fiscal in the face of demands from Sonali and BASIC banks.
Former interim government finance adviser AB Mirza Azizul Islam said that the government should not keep any allocation to recapitalise the state-run banks.
The funds given earlier did not bring any change to the financial health of the scam-hit banks, he said.
As of March 31, nine scheduled banks, burdened with huge defaulted loans, faced capital shortfall of Tk 16,507.38 crore.
They are Bangladesh Krishi Bank, Sonali Bank, BASIC Bank, Janata Bank, Agrani Bank, Rupali Bank, Rajshahi Krishi Unnayan Bank, Bangladesh Commerce Bank and ICB Islamic Bank.
Of them, Sonali Bank is facing a Tk 2,558 crore shortfall and BASIC Bank a Tk 2,962 crore shortfall.
The excessive defaulted loans because of loan scams mainly eroded the banks’ capability of keeping required capital in line with international standards, experts said.
Policy Research Institute executive director Ahsan H Mansur said that the funds given to the state-run banks were a total waste of the taxpayers’ money.
Continued demand from economists and experts for appointment of a commission to revive the country’s ailing banking sector failed to draw the government attention.
Source: New Age