Syed Mahbubur Rashid

Bangladesh Bank has given permission for opening new banks. A few days back permission was accorded for opening three banks to be financed by NRBs. If these nine banks start functioning the total number of private sector banks will be 56.

A lot of hiccup has been raised over the issue. It has been alleged that all the new banks have been awarded in favour of sponsors belonging to the ruling party. This is also not a new story. During the first tenure of Khaleda Zia some banks and insurance companies were given permission. The then BNP high ups were the skippers of the sponsors of the proposed banks and insurance companies. Earlier during the Ershad’s regime some new banks and insurance companies started operation under the private sector.

In fact the private sector insurance companies made debut during Ershad’s rule. Probably that was the only time when genuine and professional insurance personalities were the prime sponsors. But after the restoration of parliamentary democracy the politicians have become sponsors replacing the professional businessmen. So it has now become a legacy. In the meantime both the major parties auction the tickets for parliamentary seats among the businessmen. This has resulted in alarmingly increasing the number of businessmen in the Parliament. At present probably more than 60 percent members of the Parliament belong to the business community. Full time politicians are also joining the fray in the capacities of sponsor directors of the bank, insurance company and other financial institutions.

Though Bangladesh Bank grants licence for banking, yet it is invisibly guided, instructed or asked by the government. So it is useless to argue about the so-called independent and neutral decision of the central bank i.e. Bangladesh Bank. It is natural that the political government will interfere in things like. I have already discussed the legacy. However in our present political scenario the situation sometimes boils down to revenge. A mobile company got the permission for operation. Machineries were brought and installed. The date for formal opening was fixed. Meanwhile, the government changed. The new government stopped the inaugural ceremony on groundless ground. The operation of licence was kept in abeyance for a long time. When the embargo was lifted, the scenario was totally changed and the company could never see the light. The gentleman did not borrow any money from the bank. Earlier, he stayed in Japan for long and amassed some fortune. Everything was lost. It is needless to say that he had also to spend invisible money while obtaining permission from the then government. When he applied for permission, some officials from the Ministry of Post and Telecommunication proposed to visit Tokyo to see the technology of the proposed company. The abortive sponsors had to bear all the expenses including the gala shopping of the mandarins of the ministry.

If you speak from the legal point of view, you can not stop a citizen from applying for opening a bank. It is his personal right. Now the question may come as to the saturation of the requirement of the banking service. Earlier the banks which have been allowed to work have not been working properly. They have hardly turned their shoulders towards the rural areas. Moreover some of them were villains in the latest share markets scam. Neither the government nor Bangladesh Bank provides money to the sponsors of the proposed banks. That is also a very strong ground to accord permission to them. So it can be emphatically said that there is nothing to give licences for new banks.

The problem lies somewhere else. Bangladesh Bank is the supervision and regulatory authority of all banks and financial institutions. They will have to be vigilant. Certain conditions have been imposed in case of the proposed new bank. First of all six months’ time has been allowed for completing the formalities and start operation. The central bank must stick so far the timeframe is concerned. Secondly the money to be deposited with the central bank must be white. This is to be examined by the central bank with a clear conscience and high sense of ethics and also imbibed with patriotism. Earlier we have seen income tax clearance for a sponsor of either a bank or an insurance company. But actually the sponsor in question is an undergraduate student studying abroad, obviously son of a rich parents. It is widely alleged and true that in Bangladesh thousand ways are discovered for frustrating the purposes and objectives of any law, rule or regulation. It is needless to say that the concerned government officials connive with the perpetrators. Another condition is that five percent loan amount will have to distribute in the agriculture sector. The banks will also have to be active in the rural sector. Whatever may be the number of condition, these will be of no use unless properly monitored by the central bank and the banks are compelled to follow them. Two progressive and renowned economists of the country Dr. M A Barakat and Dr. Atiur Rahman very elaborately spoke of the money laundering and extensive utilising by the terrorists and fundamentalists. Of course both of them were not holding any office. Now Dr. Atiur Rahman is the Governor of Bangladesh Bank and Dr Barakat is the Chairman of Public Sector Bank. They are more than qualified for the posts they are holding now. But our frustration is that they have not able to take actions against the crimes earlier mentioned to the fullest satisfaction.

Bangladesh Bank could not saddle the commercial banks with regard to their investment in the share market. The bank was clearly found responsible for burgling with B.O. accounts but neither Bangladesh Bank nor Securities and Exchange Commission (SEC) could take action against that bank. In this connection it may be mentioned that as a listed companies a bank is to comply with certain instructions of the SEC. Usually BB wants to shake off their hands regarding the non-compliance or faulty compliances of those instructions. Let us cite an example all listed companies including the banks are to appoint independent directors in the Board of Directors. This issue has now got global importance. The US government compelled the US corporate institutions after the bust of Enron and some other big companies and dreaded cheating by the world’s one of the leading audit firm Anderson. An independent director who did not or can not have any stake on interest in the concerned organisation. Here I found an independent director in a bank who was earlier managing director of the same bank. I raised this issue to a member of the SEC. He made a very innocent reply that they can not do anything if the board of directors send such a name. Is there anything to say if such a negative reply is received? Bangladesh Bank may also give a reply in different ways if it wants to stave off his responsibility. It may say that it has nothing to do in the case of a circular/instruction of SEC. That can not be acceptable. As a supreme regulatory authority Bangladesh Bank owns power of original jurisdiction. The question is if it is willing to exercise that power for the greater good of the country.

We hope that none of the newly-proposed banks will fail to fulfill their conditions. They all shall be in the field. Let there be level playing round for all. The question should be for the survival of the fittest. Bangladesh shall have to be pro-active and vigilant. Let the good doers be rewarded and shenanigans be punished.

(The writer is a former Secretary

of DSE and a stock

market analyst).

The Daily Sun/Bangladesh/ 15th April 2012