Tk 150cr more for scam-hit Janata, Basic

The financial institutions division has recommended that Janata and BASIC banks be provided with Tk 150 crore bailout funds because of severe capital shortfall faced by both the scam-hit state-owned banks.
The financial institutions division made the recommendation to the finance division in the past week.
Experts have said that providing bailout fund to the scam-hit banks from the national budget became a usual practice in past several years that was promoting corruption and misappropriation of public funds.
Financial institutions division secretary Ashadul Islam told New Age on Tuesday that he could not comment on the issue as he was aboard.
He said he would talk on the issue of recapitalisation of the state-owned banks after arriving at home on March 10.
Of the bailout funds, Tk 100 crore was recommended for Janata Bank that was facing a capital shortfall of Tk 6,000 crore as the second largest state-owned bank became the latest casualty of the unprecedented loan scams in the government banks in the past one decade.
The defaulted loan of the bank skyrocketed to Tk 17,304 crore as of December 2018, a threefold increase, from Tk 5,818 crore as of December 2017, for the failure of its clients Crescent Group and AnonTex in loan repayment.
The entire loan of Tk 572.98 crore given by Janata to five subsidiaries of Crescent Group became defaulted while AnonTex failed to clear debt against its loan of over Tk 5,500 crore.
The rest Tk 50 crore was recommended for once profit-making BASIC Bank that turned into a loss incurring entity during the four-year tenure of its former chairman Sheikh Abdul Hye Bacchu. The bank faces a capital shortfall of Tk 4,000 crore.
No bailout fund was recommended for scam-hit state-owned bank Sonali Bank this time although it received bailout fund almost every year since 2014 after detection of Hallmark loan scam of over Tk 3,500 crore.
According to the financial institutions division, Tk 9,788 crore was sanctioned for the state-owned banks, including over Tk 6,000 crore to Sonali and BASIC banks, between FY13 and FY17.
Janata Bank has so far received Tk 1,214 crore bailout fund.
Former Bangladesh Bank governor Saleh Uddin Ahmed told New Age on Tuesday that he did not agree with the government policy to provide bailout fund to the scam-hit banks.
The scam-hit banks should be asked to meet up their capital shortfall with profit, he said.
It seemed that the scam-hit banks were given incentives for their failure, he noted.
Officials said that unlike previous occasions finance division might review the proposals and might seek explanation from the state-owned banks before making the decision of disbursing fund.
Transparency International Bangladesh executive director Iftekharuzzaman called the finance division plans a bureaucratic exercise that might not stop the practice of proving bailout fund to the scam-hit banks.
Although the amount proposed for Janata and BASIC was not big, still it would promote corruption, he commented.
The financial institutions division also recommended Tk 848.88 for recapitalising Bangladesh Krishi Bank.
It also recommended that Rajshahi Krishi Unnayan Bank and Grameen
Bank be given Tk 500 crore and Tk 1.12 crore respectively.
Former central bank deputy governor Ibrahim Khaled finds no problem with the proposed financial assistance to Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank, but gives strong reservations about the bailing out of commercial banks.
Since commercial banks were meant for making profit, proving bailout fund to them is an unethical practice which should be stopped, he said.


Source: New Age.


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