We hope some useful progress can be made from Wednesday’s special meeting between the finance minister and the board of BASIC Bank.
The minister convened the meeting after expressing deep frustration with the current management’s performance in recovering default loans and blaming political backing for the government’s failure to hold errant officials of loss making state banks to account.
Although it is welcome to concerns expressed openly, what is needed now is concrete action. The government should completely overhaul the scandal-hit BASIC Bank’s board and initiate a plan to shut it down in a managed manner to set an example for other loss-making state banks
Enough is enough. Tax-payers should not have to keep propping up the state banking sector, when it is clear poor governance and mismanagement are allowing state banks to keep running up losses with impunity, in the knowledge that the state will keep bailing them out and dealing leniently with corruption.
For BASIC’s board to keep seeking political protection while it repeatedly flouts prudent rules designed to limit bad loans and safeguard capital, is totally unacceptable.
The finance minister should make an example of BASIC bank by winding up its assets. Depositor’s funds can be protected by the Bangladesh Bank and non-classified loans transferred to a better managed state-owned or private bank.
A special purpose institution should be set up to which BASIC’s classified loans can be transferred, with the express purpose of pursuing large defaulters in the courts.
Only by doing so and holding corrupt officials to account, can the government start to make a mark in breaking the cycle of perennial state-bank losses.
