Muhith wakes up to soaring bad loans at last

After wasting much valuable time, finance minister AMA Muhith last week inquired about soaring bad loans that rocked several government run banks since 2011 in the backdrop of a series of shady credit scams facilitated by lax monitoring.

The finance minister also inquired about raising the lending rates by the banks to depict healthier balance sheets and Bangladesh Bank’s silence over the issue.

MuhithIn a directive issued last week, the finance minister asked the bank and financial institution division to let him know about the picture.

Critics were amazed that it took Muhith, a bureaucrat turned politician, such a long time to wake up from his deep slumber induced indifference to take action against irresponsible lending practice facilitated by lax monitoring that dealt crippling blows to several government run banks over time, the New Age reported.

Unconvinced by the move, they, however, called it yet another government ploy to cover up corruption and its aftermath.

They called it totally shocking that Muhith took no notice of repeated wake up calls or criticisms since shady loans were exposed one after another.

The volume of non-performing loan soared to a staggering Tk 51,344.63 crore during the first six months of the current calendar year from Tk 40,583.01 crore in December 2013.

Central bank officials said that the July-September picture relating to non-performing loans would come to light in the next month.

Everyone expected the government to wake up long back to tighten the bank monitoring mechanism after the embezzlement of Tk 3,600 crore from sate-run Sonali Bank by little known Hallmark Group was exposed in 2012.

Later in the same year, Tk 1,200 crore was embezzled by Bismillah Group from a number of banks including state-run Janata Bank.

In a delayed action, the government removed BASIC Bank’s controversial chairman Sheikh Abdul Hai in July after the exposure of disbursement of shady loans worth over Tk 5,000 crore by the state-run specialised bank once known for sound operations.

Salehuddin Ahmed said he was amazed at the government’s repeated failure to take corrective action over the last five years to protect the banks from sharks.

Officials said that never before the state-owned banks received such crippling blows as they did in last five years.

They said it happed due to corruption in sanctioning shady loans by the directors of the boards of the SoBs appointed by the incumbent government on political considerations.

By June 30, 2014, classified loans of four SoBs, Sonali, Janata, Agrani and Janata soared to Tk 19,719.21 crore from Tk 11,772.27 crore on June 30, 2012.

Former caretaker government adviser Mirza Azizul Islam called the government’s failure to identify and penalise the masterminds behind the swindling of Sonali Bank by the Hallmark Group and the shady loans extended by BASIC Bank.

He said policy makers of ruling party and directors of the SoBs appointed by them on political consideration could in no way shirk responsibility of the series of loan scams that dealt crippling blows to the government run banks.

He called for amending the law to remove the loopholes that facilitate political interference with banks without further delay.

A BB report unveiled in September 2014, identified lack of corporate governance in the state-owned commercial and specialised banks as a major factor affecting the stability of the country’s banking sector

The BB report titled the ‘Financial Stability Report 2013’ expressed serious concern over rising bad loans and financial scams in the government run banks.