Corruption in the state-owned banks will reduce by 80% after implementation of the World Bank’s modernisation project in state-run financial institutions, said a top official.
“Once the financial institutions are modernised, there will definitely be large drop in corruption of FIs including fund embezzlement and loan forgeries to a tolerable level,” said Bank and Financial Institutions Division Secretary M Aslam Alam. “I hope corruption will reduce by 80% after the system is put in place.”
He made the remarks to the Dhaka Tribune yesterday after a meeting with the visiting World Bank mission at the Finance Division auditorium. The meeting was held on Wednesday.
World Bank’s Lead Financial Sector Specialist Marius Vismantas, among others, was also present at the meeting.
The nine-member mission on the proposed modernisation of Bangladesh’s state-run financial institutions concluded its visit yesterday. The mission arrived in Dhaka on 10 February.
Making specific mentions of Sonali (Hall-Mark) and BASIC (Bismillah Group) banks, M Aslam Alam said big incidents such these ones could be prevented within a couple of years after modernisation.
The secretary explained that modernisation and training of staff would help to improve the situation in the state-owned FIs regarding fund embezzlement and loan forgeries.
He said the negotiation with World Bank on conditions of funding against the modernisation project might start next month. The government will borrow $200m from the lender for the project.
He said the implementation work would get underway from June this year following the World Bank board’s approval.
M Aslam Alam said a final agreement on the project is scheduled to be signed in April during the next meeting of World Bank and International Monetary Fund in Washington DC. He and Bangladesh Bank Governor Atiur Rahman would be there to sign the deal.
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.
Recently in the annual conference of Janata Bank, 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.
