• Tuesday, Nov 12, 2019
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‘State-owned banks place false anti-fraud control measures’

  • Published at 08:32 pm October 28th, 2014

The number of loss-making branches of six state-owned commercial banks, which maintain 22% of the total loan in the country’s banking sector, has shot up to 294 from 265 over the last one year.

Such trends invite pressure from the international lenders such as International Monetary Fund on the government to close the nonprofitable branches.

The government, however, rules out such pressure saying that the loss-making branches of five out of the six banks –Sonali, Janata, Agrani, Rupali and Basic – provide banking services to common people in the remotest areas where private commercial banks have no existence.

Bangladesh Development Bank Limited (BDBL) with 28 branches is the only bank having no loss-making branch.

Assessing performance and problems of the state-owned banks the Banking Division of the Finance Ministry on October 20 sent a report to the Parliamentary Standing Committee on Finance Ministry with the observation that those six banks are recommending loan to defaulters in violation of the central bank guidelines.

The 10-member watchdog is set to discuss the report today at the parliament building.

Referring to a field-level survey of the central bank the Banking Division in the report said the banks continued with their previous trend of hiding the truth.

They are more interested in giving big loans without proper review and justification, it said.

Sonali Bank granted over 4,500 crore to Hallmark Group hiding the truth causing the worst financial scandal in Bangladesh history and seriously eroding the credibility of the state-owned banks.

Different investigations detected that the whole management of the bank was involved in the scam.

Basic Bank too indulged in similar malpractice.

The report said out of the total 1,204, the number of loss-making branches of the Sonali Bank is now (until June 30, 2014) 65 which was 52 in June 30, 2013.

The Janata Bank has 900 branches and 93 of them are loss-making. It was 102 one year ago.

At least 75 of the total 905 branches of the Agrani Bank are incurring loss. It was 58 in June 30, 2013.

Out of the total 532 branches of the Rupali Bank 28 branches are loss-making. One year ago, the number was 12.

Scam-hit Basic Bank has 68 branches of which 33 are counting loss.

The Banking Division in its report said Sonali, Janata, Agrani, Rupali and Basic Bank have submitted “self-assessment of anti-fraud internal controls checklist” to Bangladesh Bank.

The skeptical central bank carried out a field-level survey against the checklist and detected “massive” discrepancies.

“This means that the banks have continued with their previous practice of hiding the truth,” said the report.

On June 30, the amount of classified loans in the six banks stood at Tk24,748 crore – 25.4% of the total loan.

It further mentioned that the six banks maintain 48% of the total default loans in the country’s banking sector.

“Eighty percent of the classified loan fall into the category of bad loan casting a negative impact on the capital of the banks,” said the report.

The Banking Division says the banks are inclined to giving big loans without proper evaluation of the projects.