WB changes stance, suggests corporatisation of Rupali

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Shakhawat Hossain
The World Bank (WB), in a major policy shift, has said that the government should corporatise the largely state-owned Rupali Bank instead of its full privatisation, finance ministry officials said Wednesday.
The latest suggestion about the beleaguered bank came from the Washington-based multilateral donor agency in a review meeting on the state-owned banks (SOBs) reform with the local officials.
"The WB wants the finance ministry to follow the corporatisation policy for the Rupali," said a senior official who took part in the week long review meetings ending Tuesday.
WB team led by Kiatchai Sophastienphong praised the corporatisation of three SOBs -- Sonali, Janata and Agrani -- and suggested that the same policy should be applied in case on Rupali, he said.
The largely state-owned Rupali was put on sale under the WB funded Enterprise Growth and Bank Modernisation (EGBM) project almost four years ago.
However, the government had to suspend the bank divestment process early this year after failing to strike a deal with a Saudi buyer who had offered nearly $450 million for 95 per cent share of the bank.
Since then Rupali issue has become a major cause of concern for the finance ministry. The banks' financial health deteriorated further because of a freeze on the manpower recruitment since 2005, the year when the bank was put on sale.
The finance ministry officials said they have to scrutinse the technical aspects of the latest WB suggestion before taking next course of action.
They said the ministry needs to be more careful about future of Rupali.
The $250 million worth EGBM project was started in July 2004. About 58 per cent fund of the four-year project was utilised until 2007-08 forcing the both the sides to extend its duration for two more years.
Banking and state-owned enterprise reforms, growth components like small enterprise funds and conversion of SOEs into export processing zones are among the components of the project.
The caretaker government has already turned three nationalised banks into public limited companies to modernise the country's state-owned banks which are criticised for their chronic losses and poor services.
As per deals with WB under the EGBM project -- Somali Bank Limited, Janata Bank Limited and Agrani Bank Limited -- have been given specific targets to reduce their bad debt by December next.
The WB also suggested implementation of voluntary retirement scheme in the banks to shed some 15000 or one-third of their total manpower.