In line with the suggestions of donors, a parliamentary panel on Tuesday recommended that the government reduce the number of branches of the state-owned banks to cut loss.

The parliamentary standing committee on finance ministry justifying its recommendations said many of the branches of Sonali, Janata, Agrani, Rupali and Basic banks in the rural areas incurred losses bleeding the economy.

“In many cases, we see branches of more than one state-owned bank in a small area. But none of them are profitable,” AHM Mustafa Kamal, the committee chairman, told the Dhaka Tribune after a meeting at the parliament building.

He said the banks could work through “merger of the branches” or could leave it to the private sector.

The successive governments ignored global lenders’ prescription to trim state-owned banks which provide people with basic banking services like distribution of subsidy and agri-loans, teachers’ salary, allowances for freedom fighters and elderly people through their countrywide network of branches.

Private banks operate mainly in the urban or semi-urban areas.

According to the working paper presented at the meeting, Sonali Bank’s capital deficit (up to June 30) stands at Tk45.44bn while the amount for Janata Bank is Tk16.23bn. Agrani Bank’s deficit is Tk24.9bn while Rupali Bank Tk4.25bn.

Mustafa Kamal said because of the increasing losses of the state-owned banks, “management turns to the government for capital to meet its day-to-day operation.”