A preparation mission of the the World Bank will arrive in Dhaka this week to finalise the proposed modernisation project of Bangladesh’s state-run financial institutions, officials said.
During the visit, the mission will discuss about project work, its sequencing and estimated costs with the government and other relevant officials.
The project is expected to upgrade the governance of the country’s state-owned commercial banks affected by large loan forgeries.
World Bank’s Acting Country Director Martin Raman recently sent a letter in this regard to the Additional Secretary of Economic Relations Division Kazi Shofiqul Azam. The mission will visit from February 10 to 18. This mission has been discussed and agreed with the implementing agency.
The main objective of the mission is to build on the scoping mission conducted during November last year and reach agreement on the proposed conceptual and operation framework of the proposed project.
The government’s contribution to the cost of the project and implementation arrangements will also be discussed, according to the letter.
The nine-member mission will comprise World Bank’s Lead Financial Sector Specialist Marius Vismantas. The World Bank team would like to meet the officials of Banking Division, ERD, Bangladesh Bank, private commercials banks, bank auditors and policy research organisations.
However, the global lender thinks Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) would not be viable for the proposed modernisation project and wants to keep them out of it, Banking Division Secretary M Aslam Alam told the Dhaka Tribune.
But as the government insisted on keeping the two specialised banks in the proposed modernisation project, the lender said then they would run a survey on BKB and RAKUB to assess their viability before including them into such project, Aslam Alam said.
Meanwhile, in the annual conference of Janata Bank held recently, Finance Minister AMA Muhith said it would take a long time to recover from the losses inflicted by reckless business practices of state-owned banks - Sonali and BASIC. He said a big robbery and scam took place at Sonali Bank and looting at the hands of high-level officials of BASIC Bank.
“We will have to work hard to heal the wounds these two banks have inflicted upon us. It shouldn’t be correct to say that we have fully recovered. It will take a while to regain from the losses,” Muhith said.
Banking Division sources said state-run commercial banks were now needed to be streamlined as the three incidents of forgery and fund embezzlement in Sonali and BASIC had rocked the country’s banking sector during the years of 2012 and 2013.
In 2013, the little-known Hall-Mark Group embezzled a total of Tk4,000 crore from the country’s largest state-run commercial bank Sonali. Besides, a total of Tk5,000 crore was taken out from specialised BASIC Bank through forgery. Former BASIC Chairman Sheikh Abdul Hye Bachhu was found involved with forgery.
The five local banks including state-run Janata Bank which lent Tk1,100 crore to the fraudulent Bismillah Towels Group are yet to recover a single penny in last four years.
Six years ago, the World Bank had run a similar type of project over the state-run four banks. The project was titled “Enterprise Growth and Bank Modernisation” starting from July 2004 and ending in December 2010. Under the $500m project, there was a plan of divestment of Rupali Bank and corporatising three state-owned banks - Sonali, Janata and Agrani.
