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Injection of fresh funds into SOBs this month

Experts against such major policy decision by present govt

Shakhawat Hossain

The scam-hit state-owned banks are likely to receive fresh funds this month from the public exchequer as economic experts warned that the present government should refrain from implementing such major and controversial policy decision.
 The finance ministry officials said the government has already made commitment to the International Monetary Fund to inject fresh funds into SOBs, including Sonali, Agrani, Janata and BASIC.
They said the IMF has tagged the condition of recapitalisation of SOBs as part of its decision of releasing US$140 million, the fourth tranche of the Extended Credit Facility deal with the country.
‘The programme for reforms at the state-owned commercial banks should be firmly advanced, backed by recapitalisation,’ said IMF while approving the loan on last Wednesday.
Around Tk 5,000 crore has been set aside in the current budget for recapitalisation of the SOBs, but they are demanding for 15,000 crore funds to overcome the liquidity crisis caused by scams, soaring bad loans, and unrealised payments from the government entities.
Former caretaker government adviser Mirza Azizul Islam observed that recapitalisation of the SOBs should not be considered as a day-to-day business against the backdrop unprecedented scams in the banking sector in last three years.
Sonali Bank, the largest state-owned commercial bank could not realise a single penny in the last one year after Tk 3,500 crore was swindled from one of its branches by little known Hallmark Group.
BB was forced to appoint an observer on Thursday for BASIC Bank to monitor its activities as the financial health of the scam-hit state-run specialised bank worsened in last few months.
The financial health of the bank declined significantly over the last one and half years due to loan scam and corruption that pushed up the classified loans of the bank by 101.77 per cent to
Tk 1,863.33 crore as of September 30 from Tk 923.47 crore in June 30.
Janata Bank, the second largest state-owned commercial bank, is also facing problems since Tk 1,200 crore was embezzled from its branches and a few private banks by Bismillah Group.            
Mirza Azizul Islam said the present government will face many questions in case of recapitalising the SOBs without convincing moves of recovering the embezzled funds.
He said the last caretaker government, appointed to conduct general election, did not strike the very deal with the IMF since it was a major policy decision.
Bangladesh Bank which failed to monitor the activities of the errant SOBs is favouring the recapitalisation. The central bank has already urged the ministry of finance to inject fresh funds into the state-owned banks and bail them out of the capital crunch.
Former BB governor Saleh Uddin Ahmed said the state-owned banks were facing capital shortfall due to unprecedented loan scams.
 ‘Loan disbursement on political considerations and lack of monitoring by the authorities concerned are mainly blamed for the situation,’ he said.
  He said the recapitalisation of the SOBs would be meaningful only when the masterminds behind the Hallmark Group scam and other scams would be brought to justice.

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