Efficient boards 'need to be at helm of corporatised NCBs'

FE Team | Published: June 17, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
The Bangladesh Bank (BB) Governor Salehuddin Ahmed Saturday stressed on an efficient board of directors to run nationalised commercial banks (NCBs) after corporatisation.
"Efficient and knowledgeable directors are needed for operating the NCBs smoothly," the central bank chief said while addressing a round table discussion on corporatisation of NCBs, held at the DCCI auditorium in Dhaka.
The discussion was jointly organised by the Dhaka Chamber of Commerce and Industry (DCCI) and the Media Foundation for Trade and Development.
"The chairmen and directors of the NCBs must have experience and efficiency," the BB governor said mentioning that bank management is different from other government businesses.
After completing the corporatisation process, the three NCBs - Sonali, Janata and Agrani - will have to move faster to compete with the country's private commercial banks.
"The NCBs will run with higher speed through the 'highway' from the existing 'feeder road' to face competition from the PCBs," the BB governor noted.
The central bank has already issued licences to three NCBs allowing their operations as public limited companies.
He also suggested to the NCBs to improve their quality of services by improving the efficiency of their human resources to face the challenges.
Terming timely the decision of corporatisation of the three NCBs, Chairman of the Securities and Exchange Commission (SEC) Faruk Ahmed Siddiqi said the state-owned commercial banks will come out slightly from government control and enjoy autonomy on a limited scale.
The capital market watchdog chief also recommended appointment of skilled and experienced directors to the NCBs for operating its function smoothly and ensuring autonomy.
"The NCBs will have to go in the way of privatisation process step by step," he added.
The SEC chief also expressed concerned over full autonomy of the NCBs after corporatisation while the government holds 100 per cent shares of these banks.
"The situation would deteriorate if the appointment of directors and sanctioning of loans are made under political consideration," he noted.
Chairman of the Association of Bankers Bangladesh (ABB) M Aminuzzaman suggested bringing dynamism in the management of the NCBs by hiring skilled and experienced manpower with high salaries.
"The NCBs will have to improve efficiency by training their officials to meet the challenges," said Aminuzzaman, Managing Director of the National Bank Limited.
Professor Abu Ahmed of the Dhaka University recommended offloading shares of the NCBs to raise fund from the country's stock markets for meeting its capital shortfall.
He also mentioned that one commercial bank did not hold its annual general meeting in the last eight years. Such incidents must be taken into account to protect the interest of the shareholders, he added.
"First, corporatisation is not privatisation. To give the proper perspective, it is only the first of a two-step process and, thus, not an end in itself," Managing Director and Chief Executive Officer of the Agrani Bank Syed Abu Naser Bukhtear Ahmed said in his keynote paper.
The NCBs are now facing mainly fours obstacles including high level of non-performing loans, poor information management systems and poorly paid under-motivated workforce, according to the Agrani's CEO.
"We have achieved our goals on one hand but we need to overcome the legacies of the last 35 years," Naser Bukhtear added.
Chief Executive Officer of the Dhaka Stock Exchange (DSE) Salahuddin Ahmed Khan proposed to the government to issue convertible bonds for meeting the capital shortfall of the NCBs.
"Such bonds will be converted into equity and offloaded through the share markets," the DSE executive added.
The DCCI President Hossain Khaled said corporatisation provides the enterprise with a status of independent and subject it to the same legal requirements as a private entrepreneur.
"Corporatisation of NCBs is important as we want to see the improvement of the situation but only theoretical withdrawal of government shares and transfer of ownership from the government control to autonomous body may not yield good results," Khaled added.
The major advantage of corporatisation is to install a market-oriented culture among the service providers, he noted.
Former Presidents of the DCCI M Yunus and Aftab ul Islam and Chairman of the Media Foundation for Trade and Development Faruque Ahmed also spoke on the occasion.