Our public banking sector appears to have emerged as an exclusive industry for all types of corruption, mismanagement and scams. And now the new name in the long list of failing banks is the state-owned Janata Bank PLC.
Thanks to a spree of loan scams, involving AnonTex and Crescent Group to have brought the bank to its knees.
Once branded as one of the most reputed of public banks, is now plagued with bad loans and questionable waivers. In 2017, its bad loans stood at Tk 5,818 crore, which skyrocketed to Tk 17,501.44 crore in last December - equivalent of 19.2 percent of its total disbursed loans.
A recent Bangladesh Bank (BB) report revealed that 75 percent of the banks total loans are concentrated in 5 particular branches, unquestionably a case of high risk and internally organised corruption. Moreover, BB data also revealed the bank had a capital shortfall of Tk 2,189 crore till June last year.
However, regarding the AnonTex scandal - BB has ordered Janata Bank to cancel the Tk 3,359 crore interest waiver facilities to the borrower, following an audit revealing forgeries and scams involving the loans. In addition, the scam-hit bank will also have to classify Tk 6,528 crore AnonTex owes to the state-run bank as defaulted loans in line with the BB order.
To cut a long story short, it will take Janatas total bad loans to over Tk 23,000 crore, putting it in a perilous condition.
Apart from dubious loan sanctioning and re-scheduling , instances of non-compliance include failure to adhere to loan approval and collection conditions, disregard for circulars issued by BBs banking regulation and policy department, violations of the Bank Companies Act 1991, and deviating from the banks own credit risk management and loan approval policies.
We believe, apart from how Janata Management will prevent recurrence of future scams by reprimanding corrupt officials, it is equally crucial to ensure how to recover and cope with the colossal amount of bad loans?
However, reflecting back to the binge of recent scams paralysing our state-owned banks, it is time for the countrys top-most office to intervene since BB has manifestly failed to either curb corruption or take prompt & stern action. Collective, systematic and organised crimes have besieged our state-run banks.
Nearly half a dozen of our public banks have extended unprecedented leniency to a small number of treacherously errant clients at the cost of nearly annihilating their existence. It is time to move fast, and save our public banks from choking to death.
Concurrently, it is time we must ask, how the government expects to implement reforms or proper corrective measures without ensuring accountability and transparency in our public banks.
More than enough avoidable damage has been done to our banks, whats next?
