NCBs' corporatisation comes under fresh scrutiny

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FE Report
The council of advisers is likely to take a further look at the corporatisation process of three nationalised commercial banks, still caught in bureaucratic tangle.
The finance ministry has taken the move to obtain the final say, if any, from top policymakers on the potentially crucial matter.
"The move to corporatise three NCBs is coming under fresh scrutiny by council of advisers for its approval of note," a competent source said.
"The interim administration is ready to vest the state-owned banks with operational autonomy. The advisory panel will just review the process. The finance ministry wants to get the policymakers' views on the matter," the source pointed out.
The state-owned Sonali, Janata and Agrani banks have already missed two deadlines to finalise the corporatisation process, with the latest timeline elapsing on August 31. The first "non-binding" timeline passed on June 30, 2007.
If corporatised, the nationalised banks will be able to operate as public limited companies (PLCs), but the finance ministry is dragging its feet to give its final approval, according to people with knowledge of the matter.
The corporatisation process will also clear aside the way for the banks' greater autonomy and allow the central bank to monitor their activities more intensively.
Finance ministry officials said the relevant proposal will be placed before the council body shortly, but could not provide precise date.
The officials added that they were currently reviewing the vendor's agreement, which was vetted by the law ministry.
"The law ministry sent back the copy of the vendor deal along with observations. Some of the observations made by the law ministry experts need to be looked into," an official said.
He, however, declined to comment why the process was getting delayed time and again, notwithstanding the government's commitment to the banking sector modernisation.
Analysts maintain that modernisation is the cornerstone of the sustainability of public sector banks, given the fact private commercial banks continued to generate what he called "super profits."
The sources said the finance ministry will shortly name new chief executives of Sonali and Janata banks, while it has issued circular in newspapers for the post of chief executive officer at Agrani Bank.
Earlier, the government appointed one new director for each of Sonali Bank, Janata Bank and Agrani Bank to help modernise and streamline their respective managements.
The newly-appointed directors will assume office after finalisation of the corporatisation process, it is learnt.
The wind of reform has swept through the Bangladesh's banking system since 2004 when the World Bank lent out a substantial amount of money to restructure the state-owned banks.
Under the Enterprise Growth and Bank Modernisation Project, Rupali Bank is under process of privatisation, while three other NCBs look set to follow suit.
With a US$ 257.63 million loan from the global lender, the project is designed to overhaul Bangladesh's financial sector, characterised by inefficiency and corruption.
A foreign consulting agency was appointed to advise Agrani Bank to set up grounds for the ultimate privatiation of the bank, while a private sector executive was also appointed in Janata Bank to head its management.
However, in the interim period, the banks are controlled by finance ministry.