NCBs miss 'non-binding' corporatisation deadline

FE Team | Published: July 04, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
Three nationalised commercial banks (NCBs) have missed "a non-binding" timeline to finalise their corporatisation process, thus fuelling speculation about further delay in restructuring the banks.
The caretaker government is supposed to issue a gazette notification by June 30 to allow the state-owned Sonali, Janata and Agrani banks to operate as public limited companies (PLCs).
"Although the banks were to finalise all procedures by June 30, they could not do so, thanks mainly to the delay in signing the vendors' agreement," a competent source said.
"Perhaps, the banks are dragging their feet on the pretext that the deadline, as set by the finance ministry, is non-binding. Whatever may be the reasons, the delay on their part reflects their reform-phobia," the source noted.
But a source at Sonali Bank said: "We're waiting for the appointment of the chief executive to take the helm of the bank. Only then, the process could gain momentum."
"Restructuring of the bank management is crucial. We cannot avoid the corporatisation process. But it will require more time," he pointed out.
The Agrani Bank has been running under a private sector chief executive for a couple of years, while the government appointed a private sector man at Janata Bank to head its management.
The Bangladesh Bank, the central bank, has accorded separate licenses to Sonali, Janata and Agrani to help them run as PLCs, while inducting chief executives from the private sector.
The source said the finance ministry has already sent the amended Banking Companies Act 1991 to the banks after vetting from the law ministry. It requires amendment to the act as the sate-owned banks will have to operate as limited companies.
Earlier, the state-run banks obtained registration letters from the Registrar of Joint Stock Companies and Firms, a requirement to ensure their respective business operations as limited companies.
As part of the broader reform in the country's banking sector, the government had appointed one new director for each of Sonali Bank, Janata Bank and Agrani Bank to meet the requirements.
The newly-appointed directors will assume office after finalisation of the corporatisation process, it is learnt.
The World Bank has agreed to finance the restructuring of three NCBs under its Enterprise Growth and Bank Modernisation Project (EGBMP).
The EGBMP, supported by the global lender with a commitment of US$ 257.63 million, is designed to reform the country's financial sector, characterised by inefficiency and corruption.
Since the start of this initiative in 2004, a Small Enterprise Fund (SEF) was set up to promote private sector small enterprise growth and it has so far disbursed more than Tk 1.0 billion to 1,337 small enterprises, creating additional jobs for 2,527 people.