Govt likely to sell shares of SOBs in stock marketNazmul Ahsan
The finance ministry has initially agreed to a proposal suggested by the World Bank to ‘divest’ a certain portion of government shares of the currently 100 per cent state-owned commercial banks to the stock market to shore up the capital-starved public banks and improve their fragile management.
‘In principle, we are of the view that a certain amount of shares of Sonali, Janata and Agrani could be divested [and sold] in the capital market to prop up the capital base [of the banks] and enhance accountability for the sake of good governance,’ a senior finance ministry official told the New Age on Sunday.
The proposals were made as part of the conditions imposed by the World Bank before it would consider providing any financial assistance to the government to help with the capitalisation of the government-owned banks.
The finance ministry official pointed out that it would be a considerable advantage for the government to receive a low-cost loan from the World Bank as the government has only allocated Tk 5,000 crore in the current budget for bank recapitalisation when the combined capital shortfall of the three state-owned commercial banks was at least Tk 17,200 crore.
The ministry however rejected the proposals of the multilateral lending agency to change the law giving the Bangladesh Bank powers in relation to the appointment and sacking of the bank directors.
In the first week of August, a World Bank ‘Financial Sector Monitoring Mission’ had come to Bangladesh and met with senior finance ministry officials and Bangladesh Bank policy makers to discuss the ailing condition of the state-owned commercial banks.
Following the mission, the World Bank wrote an ‘aide memoire’ in which it expressed its grave concern about the flagging financial situation of the state controlled banks—pointing to the capital shortfall, weak management, poor credit appraisals, lack of professionalism and their lax legal framework.
‘The BFID (Bank and Financial Institution Division) agreed to discuss the recommendations for improving the governance of the SOCBs including the possibility of divesting a part of the shares in the stock market,’ the aide memoire, which has been seen by New Age, stated.
On bringing about reforms in the public banks, the memoire said, ‘The mission indicated that the recapitalisation of the SOCBS would have to be accompanied by reforms in the governance of those banks and the sustainability of the reforms would have to be ensured through amendment of the legal framework, including the amendment of the recently amended Banking Companies Act.’
‘The Governor (Bangladesh Bank) agreed with the need for changes in the legal framework but also pointed out that certain actions that would improve the governance of the SOCBS could be instituted while the required legislative changes were in process,’ the memoire added.
Finance Minister AMA Muhith is expected to give a green signal allowing for a consensus to be forged with the World Bank in relation to these state-owned commercial banks, sources said, adding that any divestment plan must be first agreed by Prime Minister Sheikh Hasina.
Bangladesh Bank and finance ministry officials said the World Bank had also sought further amendment to the existing Banking Companies Act (amended, 2013) to provide the Bangladesh Bank approval powers in the appointment of directors of the state-owned commercial banks.
On this, though, the finance ministry is remaining firm.
‘It is an absurd proposition that the Act will be amended again as the Parliament in its last budget session amended the Act giving the Bangladesh Bank the authority to fire Managing Directors of any of these bank if they were involved in wrong-doing,’ a ministry official told New Age.
In the meetings held in early August, the World Bank officials apparently expressed their ‘astonishment and utter dissatisfaction’ over the recent fund aembezzlement by a number of errant companies from the state-owned banks, another finance ministry official said.
The Hallmark Group embezzled about Tk 3,600 crore from Sonali Bank and the Bismillah Group stole about Tk 1,200 crore from a number of banks, including Janata.
In addition, the Anti-Corruption Commission has inquired into Tk 3,500 crore loan scam involving the Bangladesh Small Industries and Commerce Bank Limited.
The government is yet to recover a single Taka of the stolen money, it is alleged.
comments powered by Disqus
The U.S. secretary of state John Kerry, in a renewed diplomatic initiative, has written to prime minister Sheikh Hasina and opposition leader Khaleda Zia reiterating Washington’s call to settle the dispute over election-time administration through constructive dialogue for fair parliamentary polls. Full story
The cabinet on Monday endorsed a national strategy for dealing with the issues of refugees and citizens from Myanmar living illegally in Bangladesh, proposing listing of the ‘undocumented Rohingyas’. The foreign ministry placed the document at the weekly cabinet meeting with the... Full story
The finance ministry has initially agreed to a proposal suggested by the World Bank to ‘divest’ a certain portion of government shares of the currently 100 per cent state-owned commercial banks to the stock market to shore up the capital-starved public banks and improve their fragile management. Full story
The Yunus Centre on Monday rejected the allegations that Nobel laureate Muhammad Yunus had benefited from ‘unlawful income’ by receiving foreign currencies in his personal capacity without government permission. ‘Professor Yunus’ overseas income feature prize money, honorariums... Full story
The finance minister, Abul Maal Abdul Muhith, on Monday said actions would be taken against the Grameen Bank in line with the recommendations made by the government- appointed commission that would submit its final report by the end of September. Full story
The parliamentary standing committee on public administration ministry on Monday recommended that lawmakers be allowed to head governing bodies of four government colleges in the respective parliamentary constituencies. The meeting of the committee also recommended amendment to the Full story
The Indian Border Security Force will soon deploy unmanned aerial vehicles or UAVs to the borders with Bangladesh and Pakistan to enhance surveillance. Indian Express quoting BSF director general Subhash Joshi reported Monday that a standard operating procedure... Full story
Infighting in the Bangladesh Nationalist Party has deepened with rival leaders engaging increasingly in shows of strength at different tiers of the party apparently to keep the high command under pressure for nomination in the elections. Fighting between rival groups broke out recently in presence... Full story
The left leaning partners of the ruling Awami League-led alliance are likely to ask the government to resolve the ongoing political standoff over the issue of upcoming election-time government and to dissolve the parliament before the next general elections. The leaders of the parties told New Age... Full story
Pakistan’s new president Mamnoon Hussain took office on Monday, presiding over a government battling to overcome a Taliban insurgency, resolve an energy crisis and repair the economy. A respected businessman from the financial capital of Karachi... Full story
The Awami League on Monday told an European Union mission that the coming parliamentary polls would be inclusive with participation of all parties and a solution to the issue of an election-time government could be worked out within the constitution. Full story
The Syrian president, Bashar al-Assad, warned Washington on Monday to brace for retaliation if US forces attacked his war-torn country, as he denied using chemical weapons against his people. ‘You’re going to pay the price if you’re not wise. There are going to be repercussions,’ Assad told CBS television’s ‘This Morning.’ Full story
None of the private entrepreneurs who won contracts from the present government to build long-term power plants have yet succeeded in installing them. Since coming to power in 2009, the government awarded contracts to private entrepreneurs for the installation of... Full story
The prime minister, Sheikh Hasina, has cancelled her visit to New York to attend the UN General Assembly session, an official of foreign ministry told New Age on Monday night. Sources in the Prime Minister’s Office said she had finally dropped her scheduled visit considering that the coming... Full story
The Central African troops battled fighters loyal to the ousted president Monday on the second day of clashes that have killed at least 60 people, one of the deadliest outbreaks since a March coup. The fighting erupted on Sunday near Bossangoa, some 250 kilometres north of the capital Bangui, in the home... Full story
A section of Jahangirnagar University teachers, under the banner of General Teachers Forum, on Monday held a demonstration on the campus protesting the irregularities of vice-chancellor Anwar Hossain. Teachers formed the protest rally at about 12:00 in front of the university administration building. Full story
A court in Dhaka on Monday denied bail to Odhikar secretary Adilur Rahman Khan in connection with a general diary in which he was arrested on August 10. Acting metropolitan sessions judge Ruhul Amin rejected the petition filed by Adilur seeking in the general diary the... Full story
Bangladesh Nationalist Party on Monday had a meeting with foreign diplomats in Dhaka discussing the latest political development, particularly U.S. secretary of state John Kerry’s letters to the prime minister and the opposition leader. The meeting was held at a city restaurant in Gushan area in the afternoon. Full story
The police recovered the body of a minor boy, who was abducted on Saturday last, from Chapakuri bridge area in Nakla upazila of Sherpur district early Monday morning. The victim was identified as Ramjan Shikder, 9, a student of Class II and a son of... Full story
The Indian Boarder Security Force personnel beat a Bangladeshi farmer to death along Ramkrishnapur frontier under Daulatpur upazila in Kushtia on Monday morning. The victim was identified as Bazlur Rahman, 55, of village Mohammadpur in the district. Full story
The bodies of two more crewmen of Bangladeshi cargo ship MV Hope which partially capsized in the sea off Thailand’s coast two month ago were reportedly found at a Malaysian hospital. The two are said to be cabin crew Ali Hossain and its second engineer Nizamuddin. Full story