Too uncharitable a comment on operations of private banks

FE Team | Published: April 18, 2011 00:00:00 | Updated: February 01, 2018 00:00:00

Our attention is drawn to a report published in The Financial Express April 09, 2011 under the heading "Dr Abdur Razzaque recognises state banks' role" wherein the Food & Disaster Minister said "private banks in the country are exploiting the people in many ways and they never stand by the rural people but make profits more than state banks'. He recognised "the role of state-run banks in changing the rural economy by providing credits with lower interest rate while private banks are absent there." Setting aside the role of state-run banks in the economic and rural development of the country, which we can hardly deny specially in the early stage of our nation-building activities, such a sweeping, discriminating and discouraging statement about private banks from none other than a people's representative as well as a minister is not only unfortunate and uncalled for, but also untrue. If the minister had some inkling and knowledge of banking history in this part of the world (where foreign banks played their part from prepartition days until today) and of the evolution of the local private banking system in Bangladesh, we are sure a Minister like Mr Razzaque would have restrained himself from making such an unkind and sweeping statement about the role of private banks. We can not and should not demean the role of state banks in any way for they played an important and formative role in economic and rural development in the past and even today. However, the Minister, we are sure is aware of the inefficiencies, bureaucracy, red tapism and the poor standard of service that some of the branches of nationalised banks are suffering from. Doesn't the Minister know to what extent the erstwhile Bangladesh Shilpa Bank (BSB) & Bangladesh Shilpa Rin Sangstha (BSRS) succeeded in the development of the industries and industrial base of this country? Doesn't he know to what extent these banks failed to meet the demand of the industrial clients and how these banks failed to materialise the dreams of many young, experienced entrepreneurs, industrialists and young visionaries? If there is the slightest truth in the above paragraph/statement, then we can boldly highlight the roles, the local private banks, leasing companies and non-banking financial institutions (NBFIs), played in economic and industrial development of Bangladesh. We will not err too much even if we say that without local private banks, leasing companies and NBFIs, the industrial base we have now in garments, textiles & knit sector, pharmaceutical sector, automobile, plastic, leather, ceramics, steel & engineering & so on would not be established. We are all aware of this fact that since 1983, the garments, textile, knit & other sectors expanded fast due to heroic and bold engagement and participation of local private banks along with the state commercial banks. The local private banks took the initiative and the leading role. Can the Minister deny the role of National Bank, IFIC Bank, AB Bank, Islami Bank and other banks in the development of garments, textile, knits and the creation of so many million jobs and the generation of so many billions of dollars in export earnings? There is no denying of the fact that private banks have helped create employment opportunities for millions over the years and still continue to do so. Today for bright, young energetic people, private banks are one of the first choices. Similarly, the role of private banks can hardly be exaggerated in the expanding trading sector (both export and imports) of the country. In the information technology (IT) & technological sector, the private banks are in the forefront for the development of automatic teller machines (ATMs), on-line banking, credit cards, robust integrated software and so on. In the implementation of core risk management guidelines and Basel-II, again the private banks are the forerunners. The Minister can not deny that in the status of non-performing loans and recovery drives, the private banks status is better than that of state run banks. In the maintenance of capital adequacy, 99% of private banks are compliant. Even in the rural sector, the private banks are playing their part by opening rural branches in the remote corners of the country. Today the role of private banks in providing quick loans for weavers, fishermen, farmers, vegetable growers, poultry owners etc., is a well known fact. Their initiatives and participation have multiplied many times due to direct encouragement & advice from the Governor of Bangladesh Bank. Today private banks, with the active initiative and support of Bangladesh Bank & other non-government Organisation (NGOs), are standing side by side with our poor villagers, cultivators and many more for their economic upliftment. There are also instances where many private banks have partnered with state-run banks in financing agro-based projects both in rural and urban areas. After all, such a comment like "private banks are exploiting" will not only be an unkind and untrue statement but will also be discouraging. We hope the Minister will take a little time to ponder and realise quickly the bold, dynamic and supportive role the private banks are playing for the development of Bangladesh. The writer is Managing Director, National Bank Limited, Head Office, Dhaka